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The Top SIX Reasons Why New Property Investors Fail

There are over a million property investors in Australia (when I heard that I was blown away).

But less than 20% of them have a second property and aren’t getting the full benefits of this asset class.

So something’s going wrong…

Here we go…

1) Treat investing as a hobby, not as a business. Investing means putting down tens of thousands of dollars. But many of us think that putting our name against ANY half-decent property means that we’ll get the same success as a true investor. We spend more time thinking about what car to buy than which property will bring us closer to retirement...

The best investors spend a lot of time developing a strategy and executing it. There are no shortcuts in this game and getting the first property wrong can cripple your finances for life. So treat it like a business. Seriously

2) Being too optimistic for market growth or too pessimistic. Both are unrealistic outcomes. Some of us think that history always repeats itself and 7% growth is guaranteed over the long term. On the flip side, so many of us tell ourselves a story of how we’ve missed out on the good run and that the good times are behind us

Both are extreme versions of the future and the reality is most likely in the middle. This should make us quietly confident and ready to take action. Remember, you will grow your wealth by time in the market, not on the sidelines

3) Thinking that the only place to invest is near where you live or in your own city. This is because it gives us comfort that we can drive by our investment property and physically see it if something goes wrong. It’s a mental construct

The reality is that once you have bought a property you shouldn’t need to physically inspect it again…well..ever! If you have the right property manager, you can take advantage of investing in the best suburb for your strategy, ANYWHERE in Australia¬†

4) Thinking that there is no way I can afford an investment property. So many of us think that it’s hard enough keeping up with our own mortgage repayments. To have two or more mortgages? Forget it

Confident investors know that through robust cash flow modelling and projections you can control multiple properties, WITHOUT significantly affecting your family’s budget. Seems a long way away. But slow and steady accumulation of property allows you to continue to enjoy the family vacations, concert tickets, and other luxuries

5) Becoming overwhelmed by the sheer amount of unknowns in investing for the first time. There are legal considerations, lending considerations, insurance considerations, building quality considerations, cash flow considerations, suburb selection considerations, property selection, managing tenants, tax, etc.

BREATHE, and know that you don’t have to be an expert at everything. Good investors build teams around them brokers, accountants, planners, builders, lawyers, etc. It takes time, but it’s worth it. The team does a lot of the heavy lifting. It’s a team sport

6) Not knowing where to begin to select the best location and property. Capital city or Regional? Inner city or outer? A small block or a large block? Townhouse or Flat or Freestanding or Unit or Villa? A high set or a low set? Old or new? This is just the tip of the iceberg. There is SO MUCH information everywhere and everyone has a view, backed up by facts. The problem is, these views are all different!

Once again, relax. You don’t need to read every article on property. Hear every podcast. Read every book. And somehow crack the code. The inner secret that a select few know.

There is no secret. Just find one person or a group of people who have actually invested in property and achieved what you want to achieve. Whether that is capital growth or income or both. And just learn from them. Block out the noise

Despite the initial hard work, property investment is definitely worth it

PK Gupta
Published: 11 Nov 2022

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