3 Property Investment Mistakes To Avoid


Investing in property seems to be all the rage in recent years, so it is no surprise that there are countless benefits which come from the investment. If you’re looking to invest in property, then you should play it safe at first. Avoid riskier areas which are affected by single industries, such as mining, farming and tourism and stick to more reliable growth cities.

From capital returns and rental yields, there are plenty of things to pique your interest. But, just like all things in life, investing in property comes with its own mistakes and pitfalls to avoid.

Choosing The Wrong Location

We’re all aware of the saying “location, location, location”, so it shouldn’t come as a surprise to say that picking the wrong location is at the top of the list when it comes to mistakes for property investment. Some things to avoid when looking for investment property include main road locations that lack infrastructures, such as shops, parks and transport.

The reason for this is that this type of property without nearby amenities may not be as attractive to tenants who are looking for rentals. This is why it is always important to draw up a list of things which you think will make an ideal investment property and you should ensure that you’re not only buying within the right area, but it is the ideal spot within the area as well.

Relying On Rental Income

A large majority of investors tend to buy with the mindset that their income from rentals will cover the majority of investment property-related expenses, but what will happen if you are unable to find a tenant for an extended period?

If your income doesn’t cover the costs, then it is risky and if you can’t meet the necessary repayments then you could end up defaulting on your loan and the bank may well seize your property. By only borrowing what you can afford to repay yourself is a good place to start but is something that some people only realise afterwards. You could look into short-term loans, such as commercial bridging loans, but it is always best to check with your bank and lender to get an idea of the amount which will suit your financial situation.

Not Knowing What You Can Claim

Perhaps one of the best parts about purchasing an investment property is the negative gearing. This ultimately means that if your rent isn’t able to cover your home repayments, then you are eligible to claim back a portion of that expense. But, the interest generated on your loan isn’t the only thing you can claim when it comes to tax time.

Make sure that you are having regular discussions with your accountant to make sure that you are maximising possible tax returns in line with the deductions that are available to you. These can include the costs of any repairs that need doing to your investment property, strata charges and council rates.

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