Whether you’re brand new or a seasoned property investor, there are countless misleading myths that can be easy to believe when it comes to choosing an investment property. This occurs when the investor is juggling priorities such as the need to oversee and maintain control over their high-stake investment. Investments that are made as a result of these decisions, surprisingly, may not be in the best interest of the investor. It’s time to lay these property investment myths to rest once and for all, to help new and experienced investors alike to navigate the confusing and competitive world of real estate.
What is a Property Investment Myth?
Decisions made by investors are often influenced by myths that have, over time, become unspoken guidelines in the investing world. We define property investment myths as misconceptions or widespread beliefs about property investment that can mislead many investors. These property investment myths are often a result of misinformation, outdated advice, or assumptions based on personal experiences. Nevertheless, the team at Vision Property Investment are here to set the record straight.
Property Investment Myth 1: it needs to be close enough to drive past
Problem Scenario
Rob is a first-time investor that wants to buy his first investment property. There are 2 properties that have caught his attention; the first is a beautiful home that could easily be leased to a family, but he’s concerned about it being located in another state. The second option is a house that needs a bit of work, is slightly overpriced, but is only a 15-minute drive away. Rob is more inclined to purchase the second property – so that he can fix it up himself and regularly check up on its condition after tenants have moved in.
Distilling the Myth
The first surprisingly common property investment myth is the investor’s desire to be physically and geographically to the investment property, so that it can be regularly checked on. It’s understandable for an investor to ensure the wellbeing and overall return on investment the property produces.
Property Investment Myth Solution
Driving past your investment property once a week is definitely not the way to achieve this, especially when you have better ways to invest your time. This is the duty of a property manager, who is someone that will assist with listing the property, finding the right tenants and overseeing the continued upkeep of your investment property in the future. The best option for Rob is to work with his property advisor and property manager to ensure his expectations and boundaries are communicated and respected by the tenants.
Property Investment Myth 2: it must be something you would want to live in
Problem Scenario
Lisa and Tom are a couple searching for their first investment property. They’ve fallen in love with a little townhouse, and they envision a young couple like themselves, living in it. They’re extremely attracted to the property, enough that they’d consider living in it themselves. Looking at potential real estate listings this way has restricted their available options within their budget.
Distilling the Myth
The second property investment myth is the investor’s tendency to purchase an investment property that appeals to the investor’s personal tastes. This preference often stems from a subconscious desire to attract tenants similar to yourself or to invest in a property you’d want to live in. Regardless, navigating the rental market by focusing on your personal preferences can limit the potential tenants and harm your investment property’s yield and growth potential.
Property Investment Myth Solution
The best option for Lisa and Tom moving forward is to connect with a professional property investment adviser who will support them in distancing these emotions from property investing. As an investor, your motive should be money and your financial future. It’s best to connect with professional property investment adviser who will help you weigh your needs and preferences when choosing an investment property.
Property Investment Myth 3: It Needs to be Located in a Capital City
Problem Scenario
Noah has several investment properties and is considering his next purchase: a modest little house as close to the Sydney CBD as he can afford. He gravitates towards city zoned properties, because he believes they offer a higher return on investment compared to suburban options. This preference is driven by numerous online reports highlighting the rapid value growth of properties in inner Sydney.
Distilling the Myth
Another common property investment myth is that properties closer to the city are always the best investment with higher growth potential. While city and urban investments can yield their share of benefits, it doesn’t outright make them the best. When purchasing an investment property, one should always consider the scope of their revenue goals. Properties closer to cities are likely to experience faster capital growth than the suburbs, however, also tend to have proportionally lower rental yields. City-zoned investment properties can limit tenant options based on family size, income, parking and transportation needs.
Property Investment Myth Solution
Noah should share these preferences with a professional property advisor to fully comprehend how that encourages or limits his portfolio and investment goals. By making the most of a property advisor’s assistance, Noah could rebuild his strategy based on accurate market insights, factual data and tailored advice. This may highlight that for the same price, Noah could buy a much nicer property in the suburbs and rent to a larger family, or he could even sublet the property to enable dual occupancy. A professional property investment adviser will help Noah identify the risks of investing in capital cities such as property taxes, high purchase prices, the fluctuating value of CBD housing and a property oversupply.
Property Investment Myth 4: Buying is Always Better than Building
Problem Scenario
Eliza is exploring options for her first investment property. Her dad, an experienced investor, has suggested she buy a slightly rundown house, renovate it, and boost both its value and rental yield. However, Eliza has also found a modest plot of land in a fast-growing regional town. While it’s undeveloped, she sees its potential as a great investment. Her father dismisses the idea, believing it will require too much time, effort, and money, but Eliza isn’t convinced. The problem is, she’s not sure where to turn for alternative advice.
Distilling the Myth
This property investment myth is the most surprising of this list and is often overshadowed by its perceived challenges. While there are risks to be considered – such as construction time, labour availability, and future market uncertainty – greater risk can lead to greater reward, especially with the help of a professional property investment advisor. On the upside, once a property is developed, its value can increase substantially. Maintenance costs remain lower for a longer period, all building regulations will be up-to-date, and the property can be designed with tenants in mind – such as for dual occupancy.
Property Investment Myth Solution
The best option for Eliza is to consult with a professional property investment adviser who can help her explore her purchase options and understand all the important factors involved. A professional property investment adviser will handle the research, calculations, and the entire process on her behalf. As a first-time investor, Eliza also benefits from expert guidance to navigate the complex property investment jargon she may not yet fully understand.
The Property Investment Myths Have Been Distilled
Now that some famous property investment myths have been finally put to rest, you can continue your investing journey with open eyes and new insight. We only recommend that you use professional property investment advisers, such as the fantastic team at Vision Property Investment, to receive specialised advice suited to you and your investment needs.
Reach out to Vision Property Investment today to explore your investment options—they may be closer than you think. With decades of experience, the Vision Property Investment team is equipped to help you find the ideal property, whether you’re aiming to generate passive income, clear your mortgage or make work optional.