Property investment is one of the most popular ways to invest and build wealth in Australia and around the world. In this article, we look at some of the most persistent myths that surround investing in property.
1. Property Investing is Always a Low Risk Investment
The saying that property is as safe as houses doesn’t hold true for all investors. While property can be a very low-risk investment, it applies only when investors take measures to educate themselves, conduct research, and obtain support from experts. Too many people fail to make good decisions on the basis of good research, and worse, don’t conduct any due diligence before they finalise their purchases. As with any investment vehicle, property investment for any investor requires its own risk management strategy.
2. Wealth Can be Built Without a Specific Plan
Most investor will spend more time planning what to have for lunch than setting out a long term property investment strategy. It’s not enough to look at properties at random and buy and hold a couple of properties.
Your chances of growing wealth and a comfortable retirement are vastly increased when you have a clear strategy and plan. Without a clear plan and strategy, most people either don’t invest enough, fail to invest at the right times in the economic cycle, or lack the momentum to make serious headway.
Property is a specialised field and issues like cashflow, tax, and leveraging debt and equity can be individually tailored to make the most of what you have. It’s not only crucial that you have a plan, but that it’s designed with your individual requirements in mind.
3. No Specialist Knowledge is Required to Invest Successfully
Most lay investors will look through the property section of the paper and conduct research online, making their purchase decisions on the basis of widely available information. If you make your property decisions in the same way as everyone else, you’re setting yourself up for average properties and returns.
Your purchases are only as good as your sources. Consider the investor who has accessed suburb information from private companies, property profiles, construction information, and drawn on the experience of professional advisors. Not only does he or she end up with a better investment property , more often than not the careful selection of property with respect to tax and cash flow considerations will also mean that the investor is better leveraged to make more purchases at more regular intervals.
4. Negotiation is a Peripheral Issue
The typical property purchase involves an offer from an individual buyer and a standard negotiation. However, a stronger bargaining position and great negotiation skills can make a crucial difference to the property’s profile as a good or a great investment.
One effective way to improve your bargaining position is to have a party bargain on your behalf – a property investment company that has excellent industry contacts, influence, and considerable experience in getting optimal terms and prices for their clients.
5. Every Investor is Privy to the Same Properties
Who you know and work with can determine the types of properties you can buy. Development companies often make VIP-only or pre-public offers, pitching their best offers to property advisory companies and their clients, who tend to be more serious investors. To widen your pool of potential investment properties, work with professional property investment advisors with strong industry relationships.
6. Wealth Can Be Built by Staying With What You Know
This is one of the biggest investing myths of all. The best way to minimise risk is actually to reduce exposure by diversification within your portfolio. There’s no single best place to invest in Australia. Investing in different types of properties in different cities is one of the most proven strategies to build long term wealth. Doing so effectively does require plenty of specialist research and industry knowledge, so be sure to pick a good team to help you out along the way.