Thanks for releasing me from the confines of this page. You see, unless I am being read by someone like you who understands me, I am no more than a collection of shapes (called letters) that make no sense on their own. But once read in my entirety, I have the power to impart knowledge and experience on you.
And just like the ‘Genie’ rewarded ‘ Aladdin’ for releasing him from the confines of the lamp, for every sentence that you release from this page, I am going to reward you with a piece of priceless information that is sure to help you achieve your investment goals.
Before I continue, it would be safe to assume that you are someone who is very serious about your financial future, right?
Thought so – I recognised that quality in you the moment you read to this point. In my time I have come across 3 main types of reader:
i. Those that just read the main title and subtitles for each section and then think they know what the contents they have not read are.
These guys always tend to come back to me at a later date – usually after they have made all 10 of the most common property investing mistakes and lost themselves a fair bit of money in the process.
ii. Those that read me a bit at a time and because of this, I never get a chance to share with them all the treasures that lie within me.
These guys tend to make about 5 of the 10 most common property investing mistakes and therefore, are always one step away from financial disaster.
iii. And finally, those who take the short time required to read me in my entirety. These are the smart ones who receive the knowledge I posses and use it to create treasures and the type of life that most people only ever dream of!!
These are the guys who retire early, have fun and exciting lives, have great relationships with your family & friends, be loved & admired by everyone you meet!! This is the future I foresee for you!!
OK – as much as I sincerely enjoy your attention, I know that ‘time is money’. And it would be selfish of me to keep you here longer than I need to.
So it’s time I shared with you ‘The 7 Most Common Property Investment Mistakes’ and showed you ‘How To Avoid Them’!
Mistake #1 – Failing to Create An Investment Plan
Surprisingly, there are many property investors out there investing with no plan. Those guys fail to recognise the importance of having goals to work towards – and some even go as far as dismissing this concept outright.
Take it from me – investing without a plan is a sure route to financial disaster. I am confident you have heard the saying:
‘If you fail to plan, you plan to fail!’
On the other hand, setting clear goals is the first step towards becoming a successful property investor. You see, successful investors have the following 3 things in common;
i. They set their own specific goals
ii. They develop a plan for achieving those goals
iii. They remain focused and take action on implementing their plan
With clearly defined goals you can easily devise a plan to realise them. But before setting goals, it is important to have an end result in mind – a dream to work towards.
This dream must be your dream and not someone else’s because when it belongs to you, it will keep you focused and motivated at all times. Especially at times when things may not appear to be going to plan.
However, in order to turn your dreams into reality, action is required. And a plan will enable you to take consistent action towards achieving your goal.
So how do you avoid this common mistake?
Easy – just set up a plan using the following simple steps:
a. Set your property goals & write them down
b. Set a time-frame for your goals
c. Identify the things you need to do to achieve your goals and put these into an easy to follow step-by-step plan
d. Take immediate action & remember to review your plan on a regular basis to make sure you are on track
So now you know how to avoid making No. 1 of the 7 most common property investment mistakes, let’s move straight on to No. 2!
Mistake #2 – Taking Investment Advice From Friends & Family
Please believe me when I sincerely state that my intention is not – in any shape or form – insult your family and friends.
What I am simply trying to remind you is of what you know already – and that is; although you may have a lot in common with friends & family, what works for one person may not be right for another. Especially when it comes to financial decisions and investment planning.
Where I’m from, we have a saying that sums up this wisdom and it goes:
‘One persons meat is another persons poison!’
I mean think about it – do you and your friends & family;
• Like exactly the same colour, football team, food, film, book, career, choice of partner, etc?
So although our friends and family may have our best intentions at heart – we hope – we know that the advice they give us is not always the best for achieving our personal goals and realising our dreams.
So how do you avoid this common mistake?
i. Remain fully aware of your personal and financial position and how it relates to the advice giver. You might want to think twice about taking advice from someone who has a history of making bad financial decisions. Also, never take investment advice from someone who has never invested in property.
ii. Be aware of the advice givers area of expertise and see how that relates to the advice they are giving. For example, a friend may be great at giving you relationship advice – but that does not automatically qualify them as a property investment expert.
iii.Only ever take advice from people who have already achieved the goals that you are aiming for, as these are the people with the experience to help you navigate the inevitable obstacles you will face.
iv. Make sure that you have current knowledge of the property market at all times. That will help you identify whether the advice you are being given is relevant to today’s market.
v. Refer back to your investment plan that you created to avoid mistake No. 1 – this will help you establish whether the advice you have been will take you closer too or further away from your goals.
vi. Find yourself an experienced property investor to act as your guide and mentor. OK – now you know how to avoid mistake No. 2 – let’s move on to mistake No. 3!
Mistake #3 – Not Buying Property Significantly Below Market Value
This mistake is very common among other investors because although they see why it would be ‘nice’ to have, they rarely see why it is ‘important’ to have.
Getting a property at £5,000 pounds below the original asking price is ‘nice to have’. But it is important to secure a large enough discount that will cover all your major purchase costs (e.g. deposit and stamp duty). This approach will greatly lower the amount of personal capital you need to invest in any one opportunity.
Another important reason to always buy property significantly below market value is because: Profit is made at the time of buying, and realised at the point of selling!
You still with me? Good. Because I know that the last statement may not be an easy one to digest. When I was first exposed to this concept in Robert Kiyosakis’ bestselling book ‘Rich Dad, Poor Dad’, I was ‘more than confused’. So if you are confused at this stage, let me congratulate you because ‘confusion’ is a sign from your brain that you’re about to expand your cognitive awareness and learn something new!!
Let me now use the following example to help you through your confusion:
Let’s say a property is worth £100,000 and you buy it for £100,000. You would have £0.00 equity/profit in the property.
I see a similar property for £100,000 but buy it for £80,000. I would have £20,000 instant equity/profit in the property from day one.
Let’s assume a few years have gone by, the market has fallen and both our properties are now only worth £90,000. When you sell, you are down £10,000. When I sell I am still up £10,000, because I bought with a £20,000 profit.
So you see: Profit is made at the time of buying, and realised at the point of selling! You may be wondering why I have chosen to use an example where the property drops in value. The reason for this is that you need to be fully aware that the housing market can go up as well as down.
And to be successful in property you have to make sure that you have sufficient downside protection so that you never lose money – even when the market is on a downward trend. Typically, buying property at least 10% below market value will give you a sufficient ‘buffer’ to protect your investment in the unlikely case the market drops in value. So, from here on, you might want to make it one of your investment rules to never invest in property unless you are getting at least 10% discount of its real – not speculative or inflated – market value.
So how do you avoid this common mistake?
i. First – adopt the 10% BMV rule. ii. Next – sharpen up your negotiating skills. A good place to start is by reading Donald Trumps’ bestseller ‘The Art of The Deal’. iii. Finally – find the ideal property and close the deal!!