1. Not having a reason for doing this. Over my five years of speaking at property events and presenting at workshops and seminars, I have come across hundreds of people, who, when asked why they want to get involved in property say "I wanna be rich". That, in my opinion, is not a clear enough reason. There must be some specific goal that you want to aim for, an outcome, a purpose that will drive you to achieve success. "Being rich" is too flaky, too undefined, to wide a goal to aim for. Think carefully about why you want to get involved in property - to fund your child's education, to prop up a pension, to allow you to follow your dream, whatever that may be. Without a clearly defined goal, your efforts will be unfocussed and you will not be committed to moving forwards step by step.
2. Thinking one size fits all. Property investment is highly personal to you, your financial situation, your attitude to risk, how much time you have to devote to it, how much support you have from your family etc. The type of properties that suit my investment strategy to reach my goals, may not be right for you. You must acquire properties that are suited to your personal strategy and will take you one step closer to the goal that you have clearly defined in your own mind. This is why property clubs, passive investment programmes etc are flawed from the outset, because property is never one size fits all.
3. Not doing enough due diligence or research. Before investing in any property purchase, you MUST do full due diligence and research. We come from the school of find the demand, then create the supply. Unfortunately, most novice investors create the supply, and then wonder where the demand is coming from. In other words, it's no good buying a property, no matter how good the deal might appear, if no one wants to rent it! You must fully research an area in terms of rental demand, amount of stock on the market, etc. Understand who your prospective tenant is and then find properties that will meet their criteria.
4. Taking someone else's word for it. It is your money, so satisfy yourself of the veracity of any deal you are considering or the integrity of the company you are thinking of doing business with. Do not take anyone's word for anything. DO YOUR OWN RESEARCH EVERY TIME, WITHOUT FAIL.
Never pay large fees upfront for anything. You should only pay for results achieved, not promises.
5. Focussing too much on the deal. Time and time again, I see novice investors focussing on the deal. They are intent on getting it no money down, with a rental guarantee etc. The focus should be on pre-acquisition (due diligence) and post-acquisition (ownership and management). You may be in a business relationship with a property for 25 years. The acquisition stage is a blink of an eye in that context. There's no point in acquiring a property, even NMD, if no one wants to rent it!
6. Becoming a seminar junkie and addicted to gurus. Whilst Nick and I are all for education, there are many people out there who "follow" the wrong people, and end up paying for more and more seminars because they haven't registered that the information they have already been given has not enabled them to produce any results. They then pay to go on another seminar with the same guru, to get the missing piece of the puzzle, but that is never revealed. These people become trapped into paying more and more for information, while they should be going out and putting the original information into action to see if they can achieve any results. There are many sharks in property who make a lot of money from telling others how to make money. Be sure to follow someone who talks the talk and walks the walk. Too many newbies do not recognise that they are being "sold to" and end up spending money unnecessarily. Do not fall for marketing hype, spin, and promises of get rich quick. If you adopt that attitude of wanting something for no effort, you will fail, EVERY time.
7. Lack of massive and sustained action. To be successful in any walk of life, you must be committed, and engage in massive and sustained action every day. Many people make excuses to themselves why they will do this next week, next month, after Christmas, etc. The net result of that is that there is no result.
8. Not treating your property portfolio as a business. Cash flow is the life blood of any business, and property is no different. If you do not focus on cash flow and manage it appropriately, your business will fail. Property is no different. Too many people focus on the acquisition, with no thought of the cash flow prospects etc. A property portfolio based on capital growth/equity release is a VERY HIGH RISK strategy, and one to be avoided by novice investors or those of limited financial means.
9. Lack of education and networking and lack of commitment to learning. When working in isloation, it is easy to make mistakes and lose direction and momentum. There is so much free information available on the web, that there is no excuse for not learning something new every day. Forums such as this allow you to expand your contacts and knowledge and learn from others who are more experienced than you.
10. Thinking that property is a race or a competition. It's not. It's about you taking responsibility for your financial future and doing what is right for YOU and on one else. Take your time to build your team, research deals that work for you, and triple check your research. Never be pressurised into anything in property. There is ALWAYS time to take a step back and reflect on what you are about to do to check that it is right for you.
If you would like to join an active and supportive community of like-minded property professionals, please join our Property Tribes forum.
If you are experiencing any difficulties or problems with your property investments, please post them on the forum and myself and other members of the community, will be only too happy to share our thoughts and help you resolve them.
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