Common Mistakes Made in Property Investment 

Property Investment

Here is a list of a few common mistakes that we have noticed over the years that we feel are often made by inexperienced property investors:-

Not examining all the facts
Due diligence is vital and you must make it your own responsibility to make sure it is done properly. It encompasses aspects such as inspection of the property, thorough investigation of your area’s rental market — vacancy rates, average rents and average style of property. Other aspects that need to be checked on are flood areas, future developments and infrastructure, zoning, government regulations, schools, transport and population projections. 

Assuming all builders are equal.
All builders are not equal. You need to investigate their past work and accreditations along with their reputation in the local community, financial standing and client services. You should never ever sign off on a new house without obtaining a building inspection to check on your builders work. This should be done by a qualified building inspector with extensive local knowledge. And bye the way, it’s easy to have specifications that seem the same but in reality are TEN’s of THOUSANDS of Dollars different.

 Thinking like a home owner
You need to stop thinking like a homeowner and start thinking like a business owner. If all the research stacks up and the financial projections are sound, go ahead and buy the property. The property is only the vehicle to enable you to leverage an investment and grow your capital. You may want to feel that you need to like the property; but ask yourself this question ….”would someone living in this area like to live in this house?” If the answer is yes, then you can be confident you have an appealing and very rentable property.

Afraid to invest in” long-distance” property
Why cut off all your options and potentially miss out on fantastic property deals interstate? If you have done your due diligence and researched the market that you intend purchasing in and also have a good real estate agent to look after and manage your property in your absence…..then there is no reason to exclude investing interstate. Alternatively use a GOOD buyer’s agent (I think I know one – LOL ), but still do your own due diligence and make sure you understand what their vested interest is.

 Trying to do all yourself
New investors often attempt to manage it themselves. That approach usually ends up costing more in the long run.  They typically don’t understand the fine print in building contracts, are unable to interpret scope, the hidden issues that are lurking around and just sign blindly on the dotted line without even knowing properly what their rights and obligations are.  Find an accountant you can talk to, a good solicitor who specialises in property, a broker/lender who will work with you and a reputable real estate agent to find a property in your price bracket, a trustworthy rental agent to manage your property.  The team around you is EVERYTHING!!! 

 Paying too much 
If you don’t fully understand the market you are in, don’t invest in real estate. If you don’t know what the current property values are, how to negotiate a deal, or you are just a bit too embarrassed to make a low-ball offer to a seller, don’t invest in real estate.

Not using special clauses in your contract
When signing a contract of sale there are a number of clauses you should consider including in your contract that will protect your interests. These clauses must be written into the contract prior to you signing it. These types of clauses can be related to arranging finance, building inspections, builder performance, progress payments and settlement procedures, etc. This is a specialised area that requires an understanding of contract law and building regulations.

Being underinsured
Insurance on rental property goes beyond insuring the building against fire or natural disaster.  We suggest you need to look at comprehensive landlord insurance. Most major insurance companies now offer this product, which will not only cover you for damage to the property but also for loss of rent. Make sure your levels of insurance keep pace with increased building replacement costs and inflation.


Not wishing to brag, BUT…one simple and easy way to ensure that you can avoid making any of the above mistakes is to engage in the services of Property Friends. It just highlights the amount of research and work that is undertaken on your behalf (usually behind the scenes) that makes your property purchasing experience a rewarding and happy one.  And whilst we are blowing our own trumpet, of course we have advisers around us that we ourselves use, think they are the best in their business and are happy to refer you to them – all of that without a cent going to us that is!  Give us a call.

You can learn more about our approach to property advising here , or alternatively, feel free to get in touch and have an obligation-free chat about how Property Friends can help you.  

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Property Friends is a specialist Property Investment Strategist that provides solutions for people aspiring to financial independence, choices in retirement, or leaving a legacy. (03) 9758 5331

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Uwe Jacobs Property Strategist

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