{"id":4004,"date":"2016-11-17T01:25:56","date_gmt":"2016-11-16T14:25:56","guid":{"rendered":"http:\/\/www.trc-gorod.ru\/?p=4004"},"modified":"2020-05-25T11:21:57","modified_gmt":"2020-05-25T01:21:57","slug":"10-things-beginner-investors-dont-know","status":"publish","type":"post","link":"https:\/\/trc-gorod.ru\/10-things-beginner-investors-dont-know\/","title":{"rendered":"10 things most beginner investors don\u2019t know"},"content":{"rendered":"

 <\/p>\n

\"10<\/p>\n

Through the years I\u2019ve noticed that many new property investors<\/a> make the same mistakes when searching for their first investment property – mistakes that cost them in terms of both money and time.<\/p>\n

The following list, although by no means exhaustive, sets out a majority of those mistakes:<\/p>\n

1. Not knowing the fundamentals of a budding market.<\/h2>\n

Property markets don\u2019t operate in a vacuum – they are impacted by a number of things. When you understand what drives a market you can more accurately predict those markets which will perform and those which won\u2019t.<\/p>\n

When you study a marketplace, look at the following six key drivers:<\/p>\n

Population<\/h3>\n

Markets which have a growing population can often put pressure on existing supplies.\u00a0\"Not<\/p>\n

Economics<\/h3>\n

Look for a vibrant economic area – diverse range of employers, healthy employment rate, good incomes, etc.<\/p>\n

Infrastructure<\/h3>\n

government and private industry should be investing in the local economy – building roads, homes, businesses, etc.<\/p>\n

Supply\/Demand<\/h3>\n

Is there a large glut of property which can be released or are supplies tight? Less property means higher property values due to competition.<\/p>\n

Demographics<\/h3>\n

Gives insight into who your tenants will be. Are the majority of residents retired – or nearing retirement<\/a> – or are they in their prime earning age? What are the incomes, lifestyle choices, etc. All of this information can help you choose the right investment property that will appeal to the widest number of potential tenants.<\/p>\n

Suburb yield<\/h3>\n

An ideal yield would be in excess of 5%, however if you purchase well, you can accept a lower percentage and force value to drive up the yield.<\/p>\n

Demographics<\/h3>\n

Gives insight into who your tenants will be. Are the majority of residents retired – or nearing retirement – or are they in their prime earning age? What are the incomes, lifestyle choices, etc. All of this information can help you choose the right investment property that will appeal to the widest number of potential tenants.<\/p>\n

Suburb yield<\/h3>\n

An ideal yield would be in excess of 5%, however if you purchase well, you can accept a lower percentage and force value to drive up the yield.<\/p>\n

\u00a0\"Don\u2019t<\/h2>\n

2. Don\u2019t look past the first property purchase<\/h2>\n

 <\/p>\n

One investment property purchase will not give you financial freedom<\/a>. Rather than focus all of your energies on buying that \u201cone perfect property\u201d, purchase according to the numbers and with an eye towards what you\u2019ll need in terms of capital to make your next (and subsequent) purchases.<\/p>\n

Look for properties which allow you to get a return on your deposit within six to 18 months as you\u2019ll need the capital for the next investment property. Using strategies such as discount and renovation can get you that much needed capital sooner (through refinancing or selling) than sitting around and waiting for the market to (hopefully) give it to you in terms of property value increases.<\/p>\n

Before committing to buying that first property – before you even scan the real estate websites – you must create a detailed plan that sets out your end goals and the steps you\u2019ll need to take to meet them.<\/p>\n

3. Buying purely on emotion<\/h2>\n

We Australians love property. It\u2019s so easy to get caught up in the appeal of a certain property style, neighbourhood location, amenities, etc. and forget all about the financials, but if we\u2019re to succeed as property investors we have to get past curb appeal and invest ONLY according to the numbers.<\/p>\n

I learned this lesson the hard way. My emotions derailed my plans when I purchased my first investment property many years ago, as I paid full price and purchased it at the top of the market.\"Buying<\/p>\n

My mistake cost me $35,000 in hard earned money because I had to sell – I couldn\u2019t afford to wait for the cycle to come round again! So I sold it and moved on. It\u2019s a lesson I\u2019ve never forgotten, so do yourself a favour and learn from my hard knocks – let the numbers decide if it\u2019s a \u201cgo\u201d or a \u201cno\u201d!<\/p>\n

4. Underestimating the cost of investing<\/h2>\n

When you buy an investment property<\/a> you\u2019ve got more to consider than just the purchase price.<\/p>\n

Some of the factors beginning investors might forget to include when calculating the viability of an investment property are:<\/p>\n