Top 10 Mistakes Property Investors Make

Property is a journey that has many pitfalls that can trick even the savviest of property investors. These mistakes can be the difference between being a property investor with a stable future or not. It is a hugely valuable thing to own a home, but if you do not make the most of your position, it can end up costing you later.

Our team at Property Club is here to give you the property investment strategies that you need to be successful in your ventures. We have listed the top ten mistakes we see property investors often make, and how to avoid them.

1. Not Treating Your Investment as a Business

It can be very easy to lose sight of priorities when investing in property. Such a huge investment can leave people wanting to be too emotionally invested, or too hands off.

Treating your investment like a business is the best way to ensure your venture is successful. Much like you would with your own job, ensure you are working with the right people, seeking advice, and maintaining it. Step back when you need to and let property managers handle things, but also know where your presence is important and needed. Think about your journey as a property investor as your very own small business and make sure you do what you need to do to ensure its success.

2. Forming A Direct Relationship With The Tenant

As much as possible, homeowners should avoid forming connections and relationships with their tenants. Tenants are more likely to pay their rent late or take liberties if they know you personally.

Avoiding personal relationships includes offering your property to friends or family. Adding this element into the mix of your personal relationship isn’t likely to serve either of you well and often ends badly.

3. Thinking Of The Property As Your Own Home

While you may live in your investment property for a short period, it is really important to not make this decision emotionally. At the end of the day, property investment is a financial decision, and you should make your decision based on market trends and research.

By not thinking about this decision financially, you can miss out on great opportunities and financially stable tenants.

4. Not Keeping Property In Good Condition

It can be difficult to justify spending money on your property when you are not living in it. It can often seem like there is a new issue every day. But as a property investor, it is your responsibility to keep your house well-maintained and up to living standards.

Cutting costs not only reflects badly on you as a property investor but also lowers the value of your home. Renters are more likely to pay more for a well maintained home.

5. Not Having A Depreciation Schedule

Keeping track of your deductions and tax calculations is a must for every property investor - but it can be time consuming and stressful. A depreciation schedule is a carefully calculated report that collates all of your property expenses and calculates your deductions for you.

While it can seem like a small job, investing in a depreciation schedule can take a weight off of your shoulders - especially come the end of the financial year.

6. Not Increasing Your Rent Regularly

It is part of your job as a property investor to make sure that you are keeping track of market trends and norms. Your rent should be in line with the market and you can adjust as it changes.

Sometimes this is not possible, like during 2020, but as long as you are maintaining it and keeping up to date, you are doing well.

7. Losing Focus Of The Big Picture

This comes back to the idea that you should treat your investment like a business. You need to constantly be thinking about the future and where you want to take your property.

You should think clearly about how your property is going to advance, grow, and make more money. Finding an advisor to help you with this forward thinking, and to provide a point of view that is less personally invested, is a great way to plan for the future.

8. Paying Tax-Deductible Debt Before Non-Tax-Deductible Debt

Our team at Property Club will always advise our clients to pay their ‘bad debt’ before anything else. This includes your car loans, mortgage, and personal loans - the debt that will accumulate the longer you leave it.

Your tax-deductible debt - like your interest payments on your investment property - will reduce your tax and therefore can be left till last.

9. Not Using An Accountant Who Understands Property

Our team at Property Club always advocates for having the right people on your team - and an accountant with experience and skills in property is invaluable. This can mean they own a property themselves, or that they have a background in it.

Either way they will be better able to help you understand your tax savings and minimise your capital gains tax if you are selling.

10. Not Using An Experienced Property Manager

Property management is a job in itself, and the likelihood is that you will have very little time to dedicate to your investment. Property managers are a relatively inexpensive way to make the most of your business - and they are tax deductible!

Property Managers help maintain lower vacancy rates and higher rental returns and ensure you have a well-managed property so you can sit back and relax.

Start your Property Investor Journey

No matter if you are beginning your journey or halfway through - our team at Property Club can help you avoid these mistakes and prosper as an investor.

Established in 1994, our organisation has 24 years of experience in the property market and offers experienced property investors as mentors. Included in your property club experience is continued education and support as we know the realities of a long-term investment like property. Get in touch today to find out more about how we can help you.