Investing in properties is a huge deal and can help you pave your way to financial freedom. But we can’t deny that there are some issues you can encounter from it, especially if you make mistakes that could have been easily prevented. That’s why research and knowledge are key, so you know you invested in a property that can earn in the long run.
I know I learned a lot of things based on my mistakes and successes in real estate. After doing much research and compiling all the lessons learned, I want to share it with you, too!
Seven Lessons to Remember When Investing in Properties
You learn a lot when you invest in a property, especially your first one! However, there are some things you learn even before purchasing a property to prevent grave mistakes and losses. Here are seven good lessons based on other investors and what I have learned in the past:
1. Always Have a Plan and Look Long-Term
A lot of people tend to invest in properties simply because they feel the fear of missing out. This is similar to why investors choose NOT to stay in the market, because of fear of buying early. Either way, it can cause poor investment choices in the long run.
That’s why when choosing to invest, you always have a plan and think long-term. You do the research to ensure that what you’re purchasing will give you return of investment within a good timeline. Remember, market declines can be temporary, while long-term property appreciation becomes permanent!
2. Don’t Let Emotions Run Over Sensibility
One of the poor mistakes people make is to purchase something over sentimental value. Choosing a house because you liked the owner or the jacuzzi can lead to depreciation and loss of investment in the long run.
A property isn’t just a small purchase, it’s a huge investment that needs to be worth what you pay for. Don’t get carried away just because the market seems booming right now, think clearly before you make decisions and be prepared for what’s to come next.
3. Property Investment Is More Finance Than Real Estate
Remember, you can’t get more quality properties without proper finance. That’s why it’s recommended to have a good finance broker to help you choose or manage the different lenders you work with. They can also hold the investment grade properties, ensuring that it utilizes the borrowing capacity, having you earn while paying lenders back.
4. There Isn’t Just ONE Property Market
There are various submarkets within a country alone, with each city or state having different stages in property cycles. That’s why there are different price points and property types when you go from one area to another.
You should look into areas and property markets that look like they will grow in value, and what property types seem to depreciate over time. For example, one area can have houses growing in value while apartments languish from oversupply!
5. Not All Properties Are Worth Investing In
There are hundreds and thousands of properties to invest in within the country, but most likely only 5% are investment grade. Sure, any property is an investment, but is it a good one that pays off?
Make sure that you select a property that appeals to a lot of affluent customers with a level of scarcity. It should also be in the right location and accessible to a lot of areas that fir your target market for better value and appreciation!
6. You Don’t Get Rich Quickly From This
Just because you bought a property now doesn’t mean you can start earning from it immediately. It can take years to pay off and some give up because of the “losses” experienced in the first year. You have to be patient if you want to get that return of investment!
7. Property Investments Are Like Business
Successful property investors have one secret: They treat all investments like a business. It’s best to surround yourself with advisors, have good finance, set up asset protection and ownership, and acquaint yourself with the ins and outs of the real estate industry.
It isn’t just about giving money and hoping you receive more of it after renting it out!
Wrapping It Up
We continue to learn so much in property investments, and no matter how good we think we are, there are still lessons to discover. You learn from investors, agencies, even your customers, in how to purchase and use your property for good. Again, research will always be key so stand out and never hesitate to learn more.
Hopefully, these lessons in property investment gave you an idea of where to start. So if you want to begin your first property investment, start looking for companies like Buyers Agent Brisbane to help you out now!
Do you have any questions or would like to share your experiences in property investments? Share it in the comments section below, all your thoughts are much appreciated!