Juliet Risdon
Juliet Risdon is a Director of JML Property and a property investor.
Having established the company in 1994, JML Property offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.
We are looking at the top 20 mistakes made by new (and sometimes experienced) property investors.
Last week we started with numbers 20 to 16, this week we look at 5 more potential pitfalls to look out for if you are thinking of buying property…..
15. Relying On Your Emotions
Controlling your emotions is easy to say but extremely difficult to do. The best investors are able to remove emotion from purchasing and selling decisions. In other words, it is less personal, and more about the intended and expected result.
If you are buying a home to live in, there is bound to be a great deal of emotion when you decide to leave the property. This is one of the reasons that agencies are used to sell property. The people showing the prospective buyers see the property for what it is. The more you can focus on why its being sold, and what the money will be used for, the better.
If you own investment property, the trick is to stick to your plan (which is why a plan is so important). Once a property reaches a certain level, there will come a time when it makes more sense to sell it rather than keep it. It could be difficult if it happens to be the 1st investment property you purchased.
14. Buying an old property vs. a new property
Buying older property can be extremely profitable. Newer properties generally cost a little more, and many people prefer new properties. However, there is good and bad on both sides.
Older properties are generally cheaper, but you must make sure that you have enough cash to renovate. If you make the mistake of buying on older property without putting enough money aside to spend on renovation, you will have an empty apartment on your hands that will take a long time to fix up.
Newer properties require less renovation, but you pay a premium for the space and as a general rule the size of newer property is smaller.
The trick is to make sure you know which property best suits your plan and your budget before you buy it.
13. Being your own property expert
Seeking out and listening to qualified advice is one of the most valuable ways of spending your time as a property buyer.
You can test your plan on other homeowners and investors for their opinion, and whilst you may not agree with everything they say, you will be surprised at how many good points they make.
Another source of good information is from the media. There are some excellent books, and of course online articles about property purchase.
Nowadays you don’t have to be in the dark about any part of the process. Information is available quite literally at your fingertips.
As we pointed out in part 1 though, make sure that you are consulting with ‘qualified’ people. By qualified, we mean experienced. Theories are easy to come up with but, as the saying goes, experience is life’s best teacher.
12. Not taking out adequate insurance
This is a simple one.
In parts of the world where building quality is poor, insurance is essential. You can have your profits wiped out through having to pay for fire damage due to poor wiring, a burst pipe that was unattended, or some other similar incident.
This is especially important in apartment blocks where the cause of the damage may not have been your own doing, but that of a neighbor. Ideally you would insure not just the cost of re-building the apartment, but the cost of repairing any internal damages as well.
The bank with which you have your mortgage loan can help to provide you with more details on insurance.
11. Owning an empty apartment
Empty apartments cost money, and if you are investing in property it’s money that is lost rather invested. When a property is empty, it deteriorates very quickly.
In summer time mould appears quickly, and insects and bugs find their way in the home. Heavy rain and flash floods can create problems that require time and money to fix.
In winter, shrinkage of materials can create open gaps in doors and windows, and unattended issues such as bursts pipes and electrical failures can cause lasting damage if they are not handled in a timely fashion.
If a property is for rent, every day it remains empty is lost revenue that cannot be recovered.
An empty property is a cost to be minimized. If it must sit empty for some time, make sure there is a professional management company looking after it to avoid these issues.
Next Week; Into the top 10 mistakes, including financial mistakes, agents and tenants.
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