As described in part 1, property investment is receiving plenty of attention with capital cities like Melbourne and Sydney experiencing record-high housing growth.
As an investor, jumping headfirst into the investment property market with cash in hand can be tempting.
As previously mentioned, there are many risks involved with property investment that can be minimised with the right amount of wit and property investment advice. These include not taking into account housing-related costs from repairs and installations when buying investment real estate, which can leave you covered in more expenses than you can manage. Also mentioned is the tendency to allow personal bias to get in the way of a smarter investment.
With that in mind, here are several other traps investors can dodge with sharp property investment guidance.
If you're buying real estate in cities with high property sales volumes like Sydney and Melbourne, there's a solid chance you'll be doing it through auction. This is particularly true if you're in the auction capital of Melbourne, which boasted auction listing rates of 39 per cent in 2014 to 2015, according to CoreLogic RP Data.
In the heat of a competitive auction, it's easy for first-time investors to be overcome with anxiety and make a bid that's beyond their budget. This can result in unexpectedly high repayments toward your investment property mortgage, which could go on to have crippling effects on the rest of your finances.
With professional guidance, investors clearly know where their boundaries are and can auction with confidence and with a cooler head. This will help prevent investors from succumbing to nerves and making a regrettable decision.
With Australian cities recording record high growth, many investors go in the with the mindset of investing as a get-rich-quick scheme. Any seasoned veteran will tell you that property investment takes patience, foresight and plenty of work. As the book "Real Estate Investments and How to Make Them" by Milt Tanzer advises, never rush into a purchase unless you're convinced it's a good one. There will always be more property in the market.
On the flip side, don't delay too long looking for the "perfect" investment, as no such thing exists. Be flexible with your expectations and compare your estimated returns with what you're currently making with that same money.
Working with an adviser means some of the homework will be done for you. You'll know what to reasonably expect in terms of time frames, returns and more.