When analysing the success of other property investors, we tend to focus on the positives. We look at the good decisions they have made and the good behaviours they have developed. And we hope that, if we emulate these, we can also emulate some of their results.
But to truly learn from the success of others, you also need to consider what they did not do so well. You need to look at the mistakes they have made and avoid falling into the same traps yourself. To help you with this, we want to explore some of the biggest regrets many successful property investors hold.
Here in Australia, property is somewhat of a national obsession. It is a major topic of conversation at most social gatherings and most people have some awareness of market moves. However, while many people have an opinion on the state of the market, this is often not founded in fact.
This is something successful investors know all too well, having received unsolicited advice from every sector of their social circle. And, while they now know to take this with a grain of salt, they generally learnt this lesson the hard way.
As any good mortgage broker will tell you, overcommitting on a purchase is still a disappointingly common practice. Despite knowing better, many investors have still rushed in and made an offer without sorting out their finances first. This has led to a lot of unnecessary pressure and stress and, in some cases, significant losses.
Some investors have also failed to think ahead and found themselves left short by changes to their personal situation. In many cases, this was exacerbated by having an insufficient financial buffer to get them through the tough times. And, for some, they simply were not watching their cashflow closely enough and did not spot the issue until it was too late.
Tempted by the opportunity to save money and maximise their returns, many property investors have chosen to go it alone. From finding their own properties to completing renovations and managing their properties themselves, they thought they could do it all. However, most quickly realised that this takes a lot of time and ends up costing them in the long run.
This mistake is particularly common among first time investors, as they underestimate the effort involved. Many also do not appreciate the additional value working with a property market expert can provide.
Many investors have fallen prey to the myth of the perfect time to buy or sell a property. They believed that maximising their returns meant buying at the bottom of the market and selling at the peak. And they spent a lot of time waiting for the market to complete a cycle, so they could make a move.
But after watching multiple great opportunities pass them by, they began to question this logic. They realised that it is impossible to get the timing just right and there are always good investments to be found. Now they are guided by their own investment timeline and act whenever they are ready to make their next move.
Building on the previous point, many investors will be able to identify moments where inaction led to them missing out. They might have been hesitant to commit or holding out for a better opportunity, and let a great investment get away. They then watched in horror as the property’s value significantly increased over the next 6 – 12 months.
Conversely, most experienced investors will have at least one decision that they regret rushing through. This could be the purchase they made without doing enough research or the property they should have held, not sold. Either way, their lack of patience ended up costing them in the long run.
Having been in the property game for more than 20 years, we have witnessed our fair share of investing mistakes. These have taught us what to watch out for and helped us further refine our investment model. For more information on the Search Party Property service, or advice on the investing mistakes to avoid, contact us today.