Reasons to Get into Property Investing
In this episode, I discuss the many reasons why people get into property investing and distinguish between what I believe are the right reasons and the pitfalls of getting into property investing for the wrong reasons.
0:00 – Welcome to the Show
0:45 – Reasons why people get into property investing
3:35 – The pitfalls of investing for the wrong reasonsRead More
5:24 – The fear of missing out on property
6:20 – Aligning your property with your goals
It’s vital first to understand that you shouldn’t jump into property investing because everyone is or because you think it’s a get rich quick investment. There is more to property investing than you see or hear.
In this article, I’ll talk about what motivates people to get into property investing and help you see some truths about it. What you may have heard in the past may be different from what I share with you here.
From my 25 years of experience towards becoming financially free, I’d like to share with you:
The reasons why people get into property investing
In Australia, property investing is extraordinarily popular. We’re a nation of property investor lovers.
So much so, that you can see this when you head to your local news agency, and there are property investment magazines – something that isn’t so common in many other countries.
Many people will trawl the internet searching for all things property investment, even though they might not even be interested in buying a property or may not be financially ready.
I love looking at what’s out there and what’s available. And let me be honest with you – I’ve also been guilty in the past of just browsing property online on realestate.com.au or Domain.
If there’s an open house, I’d pop in and have a stickybeak. So yes, we’re a culture that loves property investment, and it’s a national past time.
With that said, here are some of the current reasons why people invest in property:
- They’ve been culturally ingrained with the idea that it creates wealth
- They accidentally inherit or acquire real estate and therefore, now have a property portfolio
- They’ve made a calculated decision to invest in property
- They see it as a sustainable long-term investment
The wrong reasons to get into property investing
Property investing isn’t for everyone, and from my experience, I’ve seen a lot of people making the mistake of becoming property investors in this country when it’s not suitable for them.
In Australia, if you’re not prepared to play the long game or if you’re not currently financially ready, you may want to look for alternative investment ideas or else avoid property investing altogether.
Here are some of those wrong reasons:
- Property investing is a smooth, straightforward pathway to making money – this isn’t true at all. From my experience, there have been many changes in the market that have caused this to be a very bumpy road.
- Property investing solves all problems – people see property investing as getting out of the rat race. While it is, people have the idea that if you have a certain number of properties within a specific timeframe, it’ll seal their fate as a wealthy landlord. The truth is that you’ll be disappointed that it doesn’t work that way because you may be following the wrong strategy profile for the properties you have.
- Fear of missing out (FOMO) – this reason is a common reason for the younger generation, and it’s the worst reason. People that jump into property investing because of FOMO are making rash decisions without looking at the bigger picture and weighing all the risks.
The primary issue when buying property
Property investing is very expensive in our country, and for this reason, it’s perilous.
Take this as an example: think about your property portfolio as a large ship carrying two hefty containers which are your properties. If you had to turn around because you made a bad purchase decision, it would be challenging and take a very long time to correct. So make sure your first two properties are going to carry you in the right direction.
I’ve personally made some poor decisions in my early investment property profile, and it had absolutely slowed me down.
If you’ve bought a property that’s not highly sought-after or isn’t easy to sell, it would mean you may have to take an unpleasant haircut to exit. So think carefully about it when you want to start property investing.
There will be a high cost of entry and a high price of exit. For this reason, an alternative property investment option might be a better choice that requires less upfront capital.
Make sure you do your homework before going into property investing. If you don’t feel like you have the upfront capital or willing to be patient.
Australia is very expensive for property investing, and not many people are fortunate enough to make mistakes and live to tell the tale. So ask yourself whether the motivation for property investing aligns with your ultimate goals.
So is property investing for you? Are you ready for the long game?
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