Got a substantial amount of capital saved up, or some inherited funding that you want to invest into something productive? Property investment can be one of the best avenues to go down in terms of securing yourself a long-term, stable and growing asset – and something tangible that you can pass on down the line. However, it would be wrong to say that it isn’t without risks, and if taking the wrong steps or not doing research, it can be difficult to make a profit from your investment.
For some guidance on what not to do, here are some common mistakes to avoid when investing in the property market!
Getting too personally attached to an investment
Home is apparently where the heart is, so the saying goes, but if you’re buying a property for the purposes of letting it out to a tenant, or to sell on in a few years, you need to make sure that you don’t get too personally attached. An investment property isn’t going to be somewhere that you live personally, and so don’t treat it like a second home. All the property investment experts will tell you that the moment you treat your investment like a business, the moment you increase your chances of making lucrative returns. You should also keep this in mind when selecting the location to purchase your property, prioritising what will sell rather than what you personally prefer.
Not doing your research
Being a long-term investment, there is a significant amount of planning needed before going for an investment. In order to be in with the best chances of success, you should research the areas that are set to grow. Don’t be biased on an area that you know well – even if the expertise could help you out – and try to be as open minded as you can about investing in the right spot that will bolster your chances of long-term capital appreciation.
Want some more information on the property market, such as tips on the best areas, how to find out what is considered a good rental yield, and the details behind off-plan investment? RWinvest have plenty of helpful online guides, tips and videos to help you to get started. Alternatively, you could contact them (or another advisor) for direct advice or questions/concerns.
Not diversifying your portfolio
Buying multiple properties within the same area, despite seeming like a good idea if the areas is thriving, can also put your portfolio at an increased risk. Having all of your eggs in one basket will mean that if the market starts to stagnate (which can happen), all of your once-lucrative investments will be at stake. Instead, if building up a portfolio with multiple properties, try to spread them out across multiple different thriving areas, as you will also benefit from different growth areas as time goes by.
New to investment? If you don’t want to invest in an additional property, perhaps look to diversify by investing in some different asset classes entirely, such as stocks and shares for example, as an alternative. Be careful though, as some of these assets are more volatile, and require a different skillset and attention level to keep on top of.