• Download your free home buyers guide!

3 Ways To Mismanage Your Investment Strategy

When it comes to investing, there are lots of ways to make mistakes. To avoid catastrophe, you need to know how to avoid these mistakes. At Wise Real Estate Advice, we look at 3 common mistakes investors make in property and how to avoid them.

  1. Counting on low interest rates

Currently in Australia, we have some of the lowest interest rates we’ve seen in years, if not decades. Variable rates are currently around 5%, and fixed rates can be found at the lower than 5% mark. In order to secure a larger loan, and pay mortage debts quicker, investors are using the incredibly low interest rates to their advantage. This can come at a cost though. Often, investors are too reliant on low interest rates, without factoring in that the rates are likely to rise. The historic average for interest rates is that of around 7.5-8%. If you are currently paying a 5% variable, you could potential have to jump a huge 50% on your current repayments. Relying on currently interest rates could mean you are over extending yourself financially in the future. My advice is to take advantage of low interest rates, but to stress test yourself and see how you could financially handle a 8% interest rate. This will ensure you know you can afford you investment now, and in the future.

 

  1. Not having a clear strategy on your investment

Of course investing in real estate can be a fantastic way to cushion your wallet and make a clear path for a comfortable lifestyle. But not having a clear strategy, can make your property work against you.

Countless times, I have seen investors starry-eyed about the potential a property has, and how it’s going to make them lots of money. They jump in too quickly without realizing all investments come with risks and potential issues. Imagine this scenario; there’s a huge development opportunity. It’s a subdivision, and once completed, will generate several hundreds of thousands of dollars in instantaneous equity. The investor is so consumed by the dollar signs they can see in their eyes, that they over stretch themselves to be able to finance the development – even remortgaging their own home. The project puts stress on their finances, relationships and even their sleep at night because they are so worried about money. While this might be a good, or even great investment opportunity, it mightn’t be worth the pressure it puts on them and their personal situation. There are better ways to invest, and making a clear and honest picture of where you currently stand financially and where you hope to be in 5,10 or 20 years will help you to develop wealth, without sacrificing your current lifestyle. Without this strategy, you are gambling, as it is near impossible to make clever financial decisions when you’ve no idea if this opportunity will lead you closer to your goal.

 

  1. Buying out of fear in a overheated market

I’ve noticed a trend of investors buying out of fear that they will miss a rare and incredibly profitable opportunity. There are certain suburbs in Melbourne, that are becoming more and more overheated. People are effectively paying too much for a property because of this urgency to buy essentially anything to get in the market. They are going from looking for a positively geared two bedroom apartment that suits their investment strategy, to looking for anything they can grab at any cost because the supply and demand imbalance has them looking like a deer in headlights. It is crucial at times like this, to remember your rules and stick to your strategy in order to stay focused on what you are looking for. If the market in one area is too over heated, shift your focus and look somewhere else. With hundreds of suburbs in Melbourne to choose from, there are always opportunities out there waiting for you to make some money from!

If you need help in developing a clear strategy for your next investment, have a chat to Mark Ribarsky from Wise Real Estate Advice. With years of experience, he has his finger on the pulse of the Melbourne market, and can help guide you towards financial development in your property portfolio.

  • Get In Touch

    Your Name *
    Your Email *
    Phone Number
    Your Message
  • Wise Real Estate Advice

    Wise Real Estate Advice
    Reviewed from Google

    5 out of 5 stars

    Ken Stewart
    Ken Stewart

    5 out of 5 stars

    posted 1 month ago

    Mark was personally recommended to me as someone who could be of real help in appraising my property of interest and subsequently representing me at auction.
    He made time to meet for an initial chat over coffee. I was immediately impressed and relaxed with his easy and honest nature, as well as his willingness to listen to my needs.
    A genuinely nice bloke... well experienced in the RE scene, totally committed to helping his clients.... all in all, a very worthwhile experience.

    Ainsley O'Sullivan
    Ainsley O'Sullivan

    5 out of 5 stars

    posted 1 week ago

    Richard and I worked with Mark over a few weeks to secure an amazing property in Brunswick West in a very competitive market. Without Marks' expertise in Real Estate of the area, we would have struggled to buy in such a short time frame. Mark was also excellent at communicating with us. We spoke many times a day to get the deal done. Money well spent when our time was limited. Thanks again to you Mark.

Summary
3 Ways To Mismanage Your Investment Strategy
Article Name
3 Ways To Mismanage Your Investment Strategy
Description
Some ways buyers mismanage there investment strategy: Counting on low interest rates? Not having a clear strategy on your investment? Buying out of fear in a overheated market?
Author
Publisher Name
Wise Real Estate Advice Pty.Ltd.