Property Investment: What Not To Do

In the property investment field, there are eight basic rules which you must follow if you are to be a success. These rules are often called the eight must nots. These rules are easy enough to understand: Don't rely on seminars, don't forget practicality, don't ignore the numbers, don't limit yourself, don't cut yourself short, don't go it alone, don't get attached to your investment properties and don't assume anything. Now, for a more in depth look

Rule Number One: Do Not Rely on Seminars for Wise Investments

If you're really interested in a specific seminar, of course you should go - just don't expect to get specific information which you can use for your investments. General market information can be had from the speaker, which is certainly useful, but always keep in mind that the speaker is only giving their point of view and you should have one of your own.

When thinking about a seminar, ask yourself what you stand to gain by attending. Then, think about what the speaker has to gain. Why exactly are they promoting the idea that they are? Do a little research and find out if there's a lot of money to be made or if you would do better with a different endeavor. Make sure to know the facts before you invest a dime in anything. This will help you to prepare a plan which you can use to invest safely.

Rule Number Two: Do Not Cut Yourself Short

Make sure you factor in all the costs and that these do fit into your budget. This includes leaving room for the unknowns. Compare the locations. Compare the costs of the properties and how much you can buy them for and how much it will cost to make the repairs and how long this will take. You must, absolutely must, be prepared to pay for things such as insurance, adjustment expenses, pest inspections, valuations, depreciation, mortgage insurance, real estate fees, repairs, accounting fees, trust and company set up fees, utilities, taxes, and any other costs that may come up while you own the property. Do not rely on other people for this information, nor on the rent you may receive, make sure you can cover all of this regardless of rent income.

Rule Number Three: Do Not Assume Anything

Don't assume anything. ever. If you don't know for sure, you don't know, so stop trying to fill in the unknowns without solid information. Instead, make it your business to find out. This is not a get rich overnight scheme; it's a get rich with hard work and diligence game. So make sure you know cold, hard, solid facts for every step of the way. First with the asking price, third with the taxes and fees, then the calculations of returns, and not to mention what you will need to turn this property over for a profit. Make sure you know exactly how much rent you will get out of the property, and what the tenants are like, don't guess. Take the responsibility to find out everything.

Rule Number Four: Do Not Ignore the Numbers

Keep an eye on your numbers and never borrow more than you can afford to repay. This property is something you're buying to make money on; you won't be living here. Think of your property as an employee - the more debt you have, the more you'll be spending in interest payments. You have to be able to afford the mortgage whether or not you are receiving rent for the property. Knowing the status of your cash flow at all times is key, as is being prepared for the unexpected.

Rule Number Five: Do Not Become Attached

Remember, this isn't your home - so don't get emotionally invested in the property. Think of this property the way that a prospective renter or buyer might. Think of the property as you would anything else you want to sell - you want to get it into someone else's hands as soon as you possibly can. Think about how much you'll pay for the property and how much of a profit you can make by reselling or renting it.

Rule Number Six: Do Not Do It Alone

Don't go it alone; at least not at first anyway. You cannot be everything when becoming a true property investor. Learn the ropes form experts in the field. It may seem like the right idea to save money, but if you don't seek out professional help for all those steps involved in turning properties for profit, you will wind up losing money in the end. To do things right you will need a property advocate, mortgage broker, property assessor, inspector, and an accountant. It is also a wise idea to get a contractor whom you can trust to make some repairs that may come up from time to time. Be frugal, but no penny pinching allowed.

Rule Number Seven: Do Not Forget Practicality

The practical factors, will to an extent, determine the resale value of the property. Being near shops, schools and public transportation are all things to look for. Also, evaluate the neighbourhood. Is it safe? Are the schools well regarded? Knowing about the age of the home is important too. You should know if the wiring and plumbing are antiquated, if the home is well insulated and how it is heated and/or cooled. These are all things which buyers, renters and insurers will ask you.

Rule Number Eight: Do Not Limit Yourself

Each time you buy a property, it gets easier. You'll learn from each investment and will grow as an investor. You'll begin to grasp how to take advantage of the market trends. Don't limit yourself to just one investment.

Why Seek Help?

You need a good mortgage broker who can get you the best loan for your investment needs. If banks turn you down, perhaps you can find a creative financing expert who has other ideas. Property investing takes a lot of work and dedication - as well as a willingness to seek out the help of experts when needed. With the right mortgage broker or other financing expert in your corner and sufficient research, you can make wise investments which will make you a tidy profit.

About the Author

Author: James L. Hardcastle will highlight how to wisely invest in property and be profitable. Visit "Loans Australia" website for more great ideas on property investment.

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