It’s no easy feat learning how to be a property investor – there are many pitfalls you can face – especially if you’re new to the game and looking to buy your first investment.  

We’ve pulled together some common mistakes we regularly see new property investors make, and how you can overcome them!

Cash-flow management

We cannot emphasise enough how important it is for first-time investors to have a solid understanding of the initial purchasing costs they will be up for, as well as the ongoing costs.

It’s very common to speak with first-time investors who have not considered all the costs associated with owning an investment property. These can include but are not limited to rates, water bills, land taxes, body corporate fees, property management fees, and of course, insurance. Then there are the additional costs of finding tenants, or repairs and maintenance. It’s critical to have contingency funds available for any unexpected expenses.

Inflated rental guarantees

A common trap we see first-time investors fall for is the ‘promise’ of a rental guarantee. What is it you ask? It’s when a vendor or developer guarantees a rental income for a set period. Sounds too good to be true? In some cases, it is.

We find that a common issue with these arrangements is that the rental guarantee is usually priced into the sale via an inflated sales price. In many cases, investors end up paying the guaranteed rent themselves via this inflated sales price.

The guaranteed rent may also in some cases be more than the market rent, so when the contract is up, you might be left with a lower rental return or no rent at all…

It’s also important to note that lenders usually assess market rent, rather than guaranteed rent when assessing loan eligibility.

Don’t take the seller’s word for it – always do your own research, and look at comparable market rents in the area.

Thinking you can do it without assistance

As a first-time investor, understanding the ins and outs of purchasing can be difficult. This could begin with finding the right property aligned to your goals and strategy, to securing a home loan that ticks all the boxes. The process can be complex, and if not done properly, could cost you.

That’s where MAW Money comes in. Our experienced team will do all the hard work for you – from explaining your borrowing capacity and creating a purchasing budget to sharing advice on the best loan product for your investment.

Let us help you navigate the investment property journey – especially in the current rate-rising climate!