Property Investing Mistakes – avoiding the #1 mistake

Property Investing Mistakes – avoiding the #1 mistake

Posted on September 23, 2015 by Mirren Property Investment
What is the #1 Property Investing mistake?

I recently put together a video about the number one mistake I’ve seen most Property Investors make over the years and its become even more prevalent in today’s low interest rate world.

Most Property Investors focus on “having to get into the market quickly so they don’t “miss out” on the boom. They usually try to find the “right Property” – most likely the one they “like” in an area they know – by borrowing as much as they can. This is particularly dangerous – especially when interest rates rise again – as invariably they will find themselves under finance stress by following this approach.

The main mistake with this approach is the misunderstanding that property Investing is about funding the right Investment property, when it’s really about the right Property Investment. In other words the Investment right first, then the Property.

So how do you get the investment right?

I believe it starts with having the right finance foundation before you invest so can avoid Property Investing mistakes. So here’s is a simple 5-step approach I put together in the video for “getting ready to invest” that our clients have found useful in avoiding this #1 mistake:

1. Get Clear on your Goals to determine the right investment strategy

  • To increase your wealth.
  • To have money for your kids and the future.
  • To have your ideal lifestyle.

2. Understand your exact current financial position (your financial fingerprint) so you can select the right

  • type of property investment to achieve your Goals.
  • Your present income (all personal income sources Inc. wages, dividends, rent income etc.).
  • Living expenses (all your personal expenses).
  • Your total personal assets (house, furniture, cars etc.) .
  • The debts that you have (all loans and credit card expenses).
  • The tax that you pay (combined if married).

3. Make sure you have a budget in place and work it so you can improve your current finance position.

  • A budget shows where your money is going.
  • Outlines your living expenses.
  • Lets you know how much money you have left over to pay off debt.

4. Consolidate your debt first because this improves your borrowing capacity

Consolidate all your debts into one loan.
Put your salary directly into your loan.
Once a month take out your living expenses from that account.
Use a calculator (like our financial freedom calculator) to determine the best way to consolidate your debts.

5. Reduce your debts quickly with the right strategy

  • Focus on one debt at a time prioritising by the lowest debt amount.
  • Put all you focus and energy into paying of this one debt first.
  • Then focus all your funds and energy on the next debt.

Follow the steps and you will be amazed at the difference. The results can be astonishing. With the right debt consolidation strategy using the Financial Freedom Calculator, we have had clients who had a recent client who reduced their loan by thirteen years and saved $135,000 dollars in interest costs.

They were then able to use that money to purchase another investment property to help meet their financial goals. You can watch the video and download the Checklist here.

To find out how to save tens of thousands in interest and years off your loan you can download our free Financial Freedom Calculator from our resources page.

For a complimentary one-hour free Property Investment Strategy session call us on (02) 8814 5997 to reserve a time.

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