Mistakes to Avoid When Investing

Not Creating

Clear Goals

Some investors may purchase a property without a clear goal of what they want to do with the investment. This can lead to costly void periods where the property isn’t being inhabited and therefore not generating income. The property purchased may not be the best development for the investor’s goals, which can cause issues in the long run.

Before starting any investment journey, a clear plan is needed. Plans should include what exactly is wanted from an investment and what goals you want to achieve. After goals have been identified, investors can begin researching what property, locations, and returns will work to achieve the target.

For example, if investors want to make quick short-term cash, then they can benefit from buy-to-sell or renovating BMV properties to sell. Research is required to learn how to do this, where would be best to purchase a property, and any financials to expect. For those with goals of generating a steady, long-term income, buy-to-let properties would be the best option. Investors should research areas with high yields, a growing market, and excellent potential for capital appreciation.

Incorrect

Budgeting

For investing to be successful, there must be a clear financial plan with well-calculated costs. Miscalculations can lead to costly mistakes and significantly impact an investment. It’s crucial to be aware of hidden costs associated with property investment and ensure they are all included in the plan. To avoid mistakes, investors should precisely plan and budget their finances. By understanding the required finances, investors can determine what property they can afford to buy.

The costs investors include range from maintenance, taxes, fees, capital gain taxes, interest rates, and any admin charges. 

Investors should always make sure there is a plan for the worst and create small savings to rely on if things go wrong. Costs like damage to property and bad tenants can be expensive and can’t always be avoided, so it is important to have money saved for circumstances that are hard to control. Investors should also always be wary and prepared for any potential void periods in payments, this can happen if the property isn’t housing any tenants or if tenants fail to pay their rent on time. 

To ensure good property management investors should perform background checks to allow tenants with a good rental history and references to be picked. Furthermore, investors should aim to collect rent on time, keep up with property maintenance and repairs, complete inspections, and keep good track of finances and rules.

At CityRise we have an in-house letting & management team. They specialise in property management to ensure the best experience and create a hands-off journey for landlords. Having a team support an investment helps avoid making mistakes.