Property, investment properties in particular, have been touted as a fail-safe way mum and dad investors can build wealth and make money. Taking into consideration the current conditions of Australia’s property market, and the time, effort and energy that goes into finding, buying and managing an investment property, is this really the money-making method for you?
Paul Glossop is an award-winning property investment specialist, buyers agent and the founder of Pure Property Investment, and his insight into investment properties is invaluable to anyone considering making the move into the property market. These are the 5 things no one tells you about buying an investment property.
1. Expect the unexpected
“As an investor, don’t expect to have the same amount of money from rents collected hit your bank account each month. The amounts will fluctuate dramatically from month to month, depending on rates, water, outgoings, number of days in the month, and other factors.”
Tip: “Keep a sound cash buffer of 2% of your purchase price – minimum – as a float at all times.”
2. You don’t always get what you pay for
“You are responsible for keeping an eye on ingoing and outgoing money. Don’t expect your property manager to pick up on everything – even though that’s what you pay them for!”
Tip: “Set aside an hour a month to review your statements and reconcile all of your outgoings, versus your ingoings to make sure your statements are accurate.”
3. It takes time
“You won’t become a property mogul in three years. Property is a slow moving, illiquid investment.”
Tip: “Your mindset needs to be a minimum 10 year hold – ideally 20-30 years – to ensure you give your property the full exposure to one, two or even three growth cycles.”
4. It’s boring
“Property investing is boring. If you expect to be able to check your property price on a month in-month out basis, and watch your bank balance rise, property is not the vehicle for you.”
Tip: “Take the mantra of TAP. Team: build your team to secure the correct asset to fit your strategy; Action: take action and remember that there is never a perfect time to buy or sell; Patience: have your mind set to 10 to 20 years. At that time, check your asset value and I would be very confident you will have a very positive outcome.”
5. This is a business
“Owning an investment (or multiple investments) is a business. Like any business, you get out what you put in. It takes time, a crack team of experts, an element of stress and the ability to ride the long ground swell of capital growth to make sure you have the mindset of a successful investor.”
You might also like:
This is how much you need to earn to buy a house in Australia right now
The BHG guide to home ownership
The beginner’s guide to investing in 8 simple steps
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