Common mistakes made by property investment beginners
When it comes to starting in property investment, there is a lot of information out there making it a bit of a minefield for beginners.
To build a portfolio correctly it is vital to get off to a positive start and avoid common mistakes that can hamper profits for first time investors.
Missing out on research
New investors should always buy property based on analytical research. Diving in head first when purchasing a property without understanding both the market and the property itself is a dangerous thing to do. It is highly advised to look at the current competition and how the housing marketing is performing in the area at the time. Research will also make the buying process a lot easier, especially when it comes to negotiation tactics.
Failing to check credit score
To get the most competitive interest rate, you first are required to have a good credit score, but is it correct? Around one in five people have errors on their credit report and these errors could result in your score being lower than it should. It is vital to check your credit report several months before beginning the home-buying process, so you have time to correct errors and fix your credit score if it appears to be lower than you hoped.
Not understanding the costs
It is important for a property investor to familiarise themselves with potential hidden hosts involved in acquiring and holding property. There isn’t just your deposit to think about, mortgage arrangement, valuation fees, legal fees, home insurance and surveyor fees should also be part of your plans. You should never completely empty your savings when putting down the initial payments as there will inevitably be unexpected surprises which is why a contingency plan with a set amount of money set aside is also recommended. A professional accountant who is knowledgeable about property investment will be able to assist with financial forecast and budgeting.
Making an emotional investment
Purchasing a property solely because you fall in love with it can be a huge mistake. All because you have an emotional attachment doesn’t mean that other people will too and factors such as the wrong location or wrong size could lead to less demand from tenants.
Avoiding a house survey
It may not seem like a priority at the time, but everyone should arrange for a professional survey to take place before they complete the purchase of a property, even if the property is brand new. To the untrained eye, the property might look perfect, but there may be underlying structural issues that you cannot see and will cost more money to fix in the long run.