Navigating investment property pitfalls, and how to avoid them
Investing in anything, is risky business.
And apart from the copious amounts of free (and sometimes misinformed) information offered up online, there’s no exact manual that helps you navigate your way to guaranteed success. From void periods of an investment property, to tenants who decide not to pay rent, there are many factors to consider, that may be out of your control.
Of course, there are many ways you can bolster your investment to help protect and shield it from the uncertainty and risk, yet even with all the measures in place, some things are unavoidable.
From the outset, there are most certainly elements of investing that are riskier than others. There’s pitfalls and grey areas which many investors have fallen trap to in the past. There are also many tried and tested measures out there to help navigate and guide you towards a successful investment, without falling trap to pitfalls.
Set and forget
One of the major investment pitfalls occurs almost immediately and can be surprisingly common. Having acquired the ‘right’ investment property and attained tenants, it can be quite tempting to just let it sit there, quietly humming along in the background.
How fantastic, though, to have a property that isn’t constantly in the forefront of your mind with repairs and tenant turnover; it’s here though, in this calm and stress-free state, that rents can often be left for too long, becoming stagnate and untouched for years.
Unbeknown to many however, the rental market moves at a rapid pace, exceedingly faster than that of its counterpart, the sales market. This means, that if rent is overlooked for long periods, by the time the owner realises an increase is warranted, they require a substantial increase to become relevant again.
These substantial jumps in rent are rarely positively received by tenants and can sometimes cost you their commitment.
To avoid this happening, make sure you stay well-versed in your rental offering, remaining competitive by increasing in small increments. A small increase of $10.00-$20.00 will be much more positively received.
On the contrary, many investors end up with an empty investment for weeks, as they strive for the highest rent achievable. This tenacious and persistent mentality of owners can ultimately cost hundreds, if not thousands of dollars as their investment sits vacant for weeks trying to achieve unattainable rent.
Your advertising your investment for $600pw. Comparable investments are advertised at $550pw and are securing tenants regularly. By holding strong, waiting for the additional $50pw, the investment is losing money. Instead, avoid the pitfall of a financially draining investment and reduce the rent to sit competitively amongst other rentals. Then, over the course of a year, increase the rent to align with your desired income. Then, it’s a win-win!
Thinking you know
There’s no greater pitfall then jumping in head-first into an investment, without doing the research. Don’t leave it to ‘chance’ or, even worse, assume the predicted wealth after glossing over relevant statistics and figures.
Do the research. No matter the time it takes, or the lengths required, it’s vital to be prepared. And when the driving force of an investment pivots around growing and managing financial wealth, it’s too important not make fully informed decisions.
How we can help
As a new investor, there’s many unknowns and unforeseen obstacles. Engaging with a property manager who is highly informed and experienced within their local area is crucial, to really activate your investment and start yourself on the road to wealth.
Our Eview Group Proud Member Property Manager’s are highly skilled, experienced, and incredible knowledge banks, worth exploring when you shift into the realm of investment and would be more than happy to offer their services to you.
Go on, make the call and connect with your local Eview Group Property Management business!