Most first-time property investor mistakes are not dramatic. Nobody loses everything in a week. They are quiet decisions that cost a little every year for twenty years. These are the ones I have watched most often since 1997.
Buying the home you would want to live in
An investment property has to suit its tenants, not you. The kitchen you love may add nothing to the rent. The street you would never live in may let in a week, every time.
Looking at the price, not the weekly cost
Two properties at the same price can cost their owners very different amounts each week. Rent, rates, insurance, management and the loan decide what you carry. That figure matters more than the price.
Putting it in the wrong name
Ownership is set on the day you sign, and it follows the property to the day you sell. Changing it later is costly.
Leaving no buffer
A vacancy, a hot water system and a rate rise can arrive in the same quarter. Investors who sell in a hurry rarely chose a bad property. They ran out of room.
Buying the building, not the land
Real estate is the land. The building depreciates; the land is what grows. A unit in a large block with little land behind it behaves very differently from a house on its own lot.
Waiting for the perfect time
There is never a perfect time. Time in the market matters more than timing the market. Months slip into years, and years into decades.
Going it alone on the contract
Sunset dates, provisional sums, finance clauses. Each one is plain once explained and costly once missed.
Stopping at one
The first property is the hardest. The equity it builds is often what makes the second possible. Few could buy five properties at once, but most can plan to own five over time.
Two investors bought similar homes in the same year. In year two, both had a six-week vacancy and a rate rise. Priya had $15,000 set aside and barely noticed. Tom had nothing spare, put the shortfall on a credit card, and sold eighteen months later, losing the costs of buying and selling.
Nicholas Lockhart
General information only. No advice is given.