Navigating the Property Market: Avoiding Common Pitfalls

As a real estate agent with over 25 years of experience, I've seen the property market evolve, and with it, the strategies people use to invest. Michael Yardney, a respected author, property investor, and wealth creator, often highlights the importance of understanding what a true investment means, especially with so many "get rich" stories circulating.

Let's dive into some of his key insights on what not to do when investing in property.

Michael Yardney's Top 8 Ways to Lose Money as an Investor:

1. Purchasing Off-the-Plan: One of the biggest hurdles here is finance. Loan pre-approvals are often only current for three months, making formal pre-approval for off-the-plan purchases difficult due to uncertain completion dates. This can be a recipe for disaster.

2. House and Land Packages: These are typically found in new or outer suburbs, which often have less disposable income, lower demand, and a smaller choice of diverse tenants. Crucially, the land value in these packages is often less than half the total purchase price.

3. Buying, Renovating, and Selling (Short-Term): While an excellent long-term strategy, in the short term, this approach can be unprofitable once stamp duty, buying and selling fees, and taxes are factored in.

4. Positive Cash-Flow Properties: While appealing, relying solely on positive cash flow is generally not an easy path to significant wealth.

5. Options: Trying to profit from property without ever owning it can be a risky and complex strategy.

6. Rent Guarantees: Be wary of rent guarantees offered by sellers or developers. The "guaranteed" rent is often built into the purchase price, meaning you're essentially paying upfront for the rent you'll receive later.

7. Regional Properties: Generally, capital city properties tend to outperform regional areas, offering higher rental growth and more tenant demand. While there are exceptions, city properties often provide more consistent growth.

8. Investing in Mining Towns: These markets are highly susceptible to boom-and-bust cycles. When the mining boom slows, it can become very difficult to find a buyer for your "great investment."