We all know that property is the preferred asset class for most Australian’s looking to grow their wealth. However, most don’t ever buy more than one investment property. Why is that?
What The Stats Say
ATO statistics say that about 2 million Australians own an investment property with about 75% of them only owning one.
There are a number of reasons people buy their first but never their next investment property and we list some of the more common reasons below:
1.Think One Is Enough
One of the main reasons why people only purchase one investment property is because they think one will be enough. Most are aware they need to invest and grow their money for their future but many will only buy one, thinking that this will be enough.
No-one had shown them how investing in property creates retirement income, when done the right way.
2.Fear Of Taking On Debt
Many Australians have a fear of going in to more debt and think buying property has their finances become more risky. The opposite is true – when buying well located property you’re going to have less risk, because you’re setting yourself up for financial security. When you understand the facts and figures and what you’re likely to achieve in the next 5 – 10 years it can help you feel more comfortable with your decision.
3.Low Borrowing Power
Another challenge investor’s face is their lack of borrowing power and we talk to people often who have been advised by their bank that they aren’t in a position to borrow any more. It is always best to work with an experienced broker rather than go directly to your bank, one that specialises in investment lending who can look at your personal financial situation and identify opportunities for you to leverage further.
4.Something Goes Wrong With The First One
Rather than researching the fundamentals of the market most investors purchase a property in an area that they know so don’t necessarily make money out of their first transaction, immediately. They may end up with something that costs them money and over time they become despondent about investing in property.
Or it may be that their first tenants were ‘bad’ ones and that has soured the experience for them.
Or perhaps they hired a property manager that tends to make life difficult for them and this has brought up its own challenges.
5.Fear Of Making The Wrong Decision
It’s easier not to have to make a decision than to make the wrong decision. However, making no decision is still making a decision!
The weight of the responsibility often holds investors back and often they’re dealing with huge sums of money, so want to make the right decision.
If all they are focusing on is what could go wrong, it hardly puts them in the right frame of mind to go out and make a purchase.
6.Lack Of Education
We don’t learn how to invest at school and if you don’t come from a family who are investors, or have trusted people around you to learn from and guide you it can be challenging to continue the journey of building wealth for your future.
We find the majority of our clients aren’t really sure what they’ re doing and come to us to find out the best way to invest and enjoy working as part of a team to get the best results. They also understand the importance of being able to simply pick up the phone and chat things through.
This is where education and research is crucial, as is having the right financial and investment advice – particularly if either party in the relationship has been burnt by property in the past.
7.Worry About Things You Often Can’t Control
People often will worry about things which they have very limited control over like, ‘What if I can’t get a tenant? What if I do get a tenant and they trash the place? What if interest rates rise?’ .
This, together with doom and gloom headlines in the media, the well-meaning but negative comments of friends and family can cause many potential investors to stop their wealth building journey.
How Can Curtis Property Group Help You
We understand that investing in property can be a little confronting for some, which is why we enjoy educating our clients while also helping them to avoid the common mistakes most investors make.
The First Step is your Free Investment Planning Session
Register for your free Investment Planning Session with one of our team, where you will learn practical and easy to implement wealth strategies suited to your current financial situation. Call our office on 08 6323 2306 or email info@curtispropertygroup.mysit3.com
Read some of our other blogs:
7 Mistakes Commonly Made By Property Investors – http://curtispropertygroup.com.au/7-mistakes-commonly-made-by-property-investors/
What Does The Perfect Investment Property Look Like – http://curtispropertygroup.com.au/what-does-the-perfect-investment-property-look-like/
How To Be Smarter Than The Banks – http://curtispropertygroup.com.au/smarter-banks-investing-property/
