Many things but the most important piece of the puzzle is what is your specific strategy?
Are you focused on short term wins from the rental return or the long-term growth potential of your investment?
Once you have determined this, the rest falls in place fairly easily i.e. finding the right property in the right location. Below are some key things to to avoid when you decide to start your investment journey.
1. Not having a plan and a strategy – Without understanding what your goals and objectives are, your purchase will most likely be pure speculation.
2. Not getting good advice upfront – It’s like reading vehicle reviews after you purchase your car. You really don’t want to buy a lemon.
3. Not working out what entity to buy your investment in and not understanding how to maximise your tax – without discussing your plans with your accountant beforehand, you will end up leaving money on the table.
4. Finance – Successful investing is a game of finance, property is just the vehicle. Engaging a mortgage broker upfront to find out what your budget is will determine a big part of your strategy.
5. Not fully understanding cashflow – Capital growth is key, but so is cashflow. Growth gets you the gains, but cashflow keeps you in the game.
6. Letting emotion guide your decisions – it’s a numbers game, don’t follow your heart.
7. Listening to the media – so many investors make 30+ year investment decisions based on the last 30 days’ news. Property investing revolves around cycles and you need to understand this, otherwise fear will drive your actions and you will never be ready to start your investment journey.
8. Procrastination – beware of analysis paralysis. There will always be ‘another’ potentially better property next week to look at but unless you pull the trigger on a property where the numbers work, you will probably keep missing out. Time in the market is where the money is made and not timing the market (no matter how clever you think you are). Big banks and financial institutions spend millions on economic forecasting, and they still get it wrong most of the time.