INVEST FOR SUCCESS – Pitfalls to avoid in property investment

property investing | pfaasia.com
After having a better understanding to obtain initial seed capital to invest in property through ZERO DOWN strategies, the next thing we should turn to is to take care of the LAND MINE in property purchase. In this article, we will explore some pitfalls and good practice in property purchase & investment.
 
Common pitfalls to observe :-
 
Beware of crowd pulling factor, i.e. avoid herd mentality by following the crowd 
It is common for any property project, the company owners, directors, their friends or investors will have the 1st hand information to book choice units or buy at discount. Only remaining unsold units are open to public. This scene is more visible when people crowding themselves at a property exhibitions, rushing to select units, it is more of emotional buy rather than logical purchase.
Buy a dream home and renovate a lot
Many think of investing after having a house or after buying a dream home. On the contrary, in order to accumulate seed capital for future investment, buy property for investment first, rather than buying dream home. This is especially important as many will renovate and spend lots of money to decorate the dream house, and have little left for investment.
 
Do a financial health check
Before investing, remember to look at your finances, is your cash flow healthy, do you have at least 6 months of savings to cover emergency expenses, how much can you afford to borrow, how about your health / medical insurance, it is adequate to cover any unexpected medical emergencies ? This is an important aspect as property investment is less liquid and any change to financial situation and required immediate sale will take at least 6 months to get back the money. 
 

Research and study on successful property investors have revealed they have some similiar good practice when it come to property investing.

Start one property at a time
Start with small investment first, one at a time, with at least 6-12 months time gap. Learn how to negotiate for a good buying price, make some friends with bankers, lawyers or even valuer, as they could provide great help or information for your property purchase. A good way to explore will be residential property as the risk is lower compared to commercial or industrial properties.

Start with completed property with tenancy
As this is an important investment asset, look for completed property as you can check the surroundings, whether it is busy with people, will it be flooding after heavy downpour, traffic conditions etc. It will be much better if the property is occupied with tenancy, with at least 1 year to tenancy expiry so you are assured of the cash inflow from the tenancy to offset some of your mortgage payments.

Know your market
Identify up to 3 areas you plan to invest in. Do some homework by understanding the development in that particular area, the amenities, the population, the buying power and most importantly, the transacted price of the property. You may look through the classified advertisement to have a rough idea of the selling price of the property, and take some notes on the pricing trends. 

Now, you have some information to make your property investment a successful one. The next step is to start some planning and take action. Aim to buy 3 properties and you are on your way to enjoy financial retirement much earlier. Wishing you good luck in your property investing. 

Comments
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