Five common mistakes made by property investors

First-time and would-be property investors may think the property investment world is easy to break, but all too often they don’t do their homework and make silly mistakes.

Here are five of the common mistakes made by first-time property investors.

1. Not choosing the right location 

Getting the location right for your property is crucial if you’re going to rent it out.

But new investors often assume they should buy property in an area they know, or get distracted by the look of a particular property.

However, there’s no point in owning a lovely property in an area where no-one wants to rent it, so you should abandon any pre-conceived ideas about where you should buy, and look to the market to find areas where people want to rent.

2. Not treating property investing as a business

If you’re going to succeed as a property investor, then you need to treat it as a business from the start.

Your key focus should always be on which property investments will give you the best capital growth and rental yields, and won’t cost you an arm and a leg in the first place.

3. Getting too emotionally involved in the property

If you’re going to make a go of it as a serious property investor, then you need to leave your emotions about a property behind.

It’s not going to be a house that you’ll live in, so there’s no point in getting carried away with interior decorating ideas or wanting to stamp too much of your personality on the property. You’re buying it to rent out, so it’s best to stick to neutral interiors and colours that will appeal to everyone, not just you.

4. Not using a property management company

Many first-time investors look at property management options and see it as an expense which they could save on.

However, it’s usually only a small fee, it’s tax deductible and you gain the huge benefit of having experts to handle tenant problems. With the best will in the world, not all rentals run smoothly all the time and it offers great peace of mind to have a company handling the rental business side for you.

Not only will they be experienced at dealing with tenant problems, but they’ll also have a maintenance team ready to handle leaks, repairs and unexpected problems.

5. Buying an expensive property

Would-be property investors may think that buying an expensive property automatically means they can charge higher rent and make more money.

Although high end rentals can work well when the economy is buoyant, it certainly doesn’t mean that you can make more money. You may well have to work harder to find the right tenants and they’re not a good option during an economic downturn.

In the long run, it’s better to invest in an average property, where they’ll be far more potential tenants, than splash your cash on a high end investment.