Why do Investors Stop at One Property?
Contact a Buyer's Agent for Non-Biased Advice
Statistics show that the majority of property investors own just one investment property. The rise of the renting generation has been widely reported in recent times, and this seems like a sound leasing opportunity if you buy right. Despite the benefits of owning investment properties, the following ten reasons investigate the factors that stop landlords from expanding their portfolios.
The choice to purchase an investment property isn’t always straightforward. Even with the means available, certain fears can hold investors back. These fears include: paying too much, problem tenants, vacancy issues, not getting an investment return, a market crash and making lifestyle sacrifices.
You can mitigate these factors by educating yourself on each potential setback. A real estate agent can't trick a buyer into a higher price if the buyer is educated first. There's less risk in purchasing a house in a suburb close to schools and shops than in a problem area or a noisy road. Keeping an eye on the best suburbs and the housing prices within those areas should help you determine if a house is a good investment.
It's true that you'll need a regular income in order to secure finance and afford out-of-pocket expenses as a landlord. However, a disciplined buyer on a lower income is not necessarily priced out of the market. With strategic planning and budgeting, owning investment property can become a reality as long as you do your research, start with a deposit or equity, and understand your budget.
Some landlords believe that investment losses must be paid out of your net income, and using this strategy can limit the number of properties you can acquire due to living expenses. You can overcome this problem through using your equity to balance the gap between ownership expenses and rental income, subject to the conditions of your loan.
Lack of capital growth is a major roadblock to landlords purchasing additional investments. This affects the speed in which they can refinance their loans to release equity, in order to fund the next property’s deposit. In order to achieve good capital growth with your next property, seeking independent advice from a local buyer’s advocate can give you insights on how to achieve this.
Some of us may never own multiple investment properties because we simply didn’t realise we could. The large debt associated with owning multiple investment properties can be a major deterrence to some investors, and not everyone invests for the sole purpose of capital growth. The key to gaining confidence with an expanded portfolio is preparing with more information, however personal risk thresholds still apply.
Waiting for your investment to see a great increase in value can take years or even decades to amount, and investors with only one property might feel impatient that their current investment isn’t getting results. When their first property’s performance expectations aren’t met, this can negatively impact their decision to invest in more. To combat this common issue, it’s important to understand the market, create realistic long-term goals, stay on top of your investment strategy and have patience.
Some people believe in a plan to pay off your first investment property before moving on to the next, but this isn’t necessary or strategic. Through owning multiple investment properties, capital growth has greater potential to compound over a longer period of time.
Purchasing an investment property sounds like an easy way to create wealth, however it requires careful planning and research-based investing. In order to avoid the ‘buy first, plan later’ mentality, make a concrete plan including your goals that you can mold your investment around.
Some investors fall victim to biased advice, which can lead to unknowingly purchasing a poor-performing property. A bad choice can land you an investment that doesn’t grow or falls back in value, placing a second investment out of reach. Investors need to do their own research and make an informed purchase through planning and seeking independent advice.
A buyer’s agent in Melbourne or your own city can help you make more informed choices. If you’re looking for a buyer’s advocate in Melbourne to help assist you with purchasing an investment property, Property Mavens has you covered.
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About Miriam Sandkuhler, Property Investment Advisor
With Diplomas in Property and Business Studies – in a non ASIC regulated industry, she’s uniquely qualified to develop and also fulfill successful and sustainable property investment strategies for her diverse range of clients - investors, SMSF trustees and home buyers alike.
