At the beginning of your campaign your agent would have appraised your property.
To get to this figure they would have conducted a comparative market analysis and looked at similar properties that have sold within the last 90 days. They would have considered current competition, wider market trends and your properties structure and conditions to arrive at a value that they believe you could achieve if you sold your property at that point in time.
Understanding buyer sentiment is important when setting your price. Talk to your agent and see if there are any passionate buyers, what does the agent think they would be willing to spend, what is the general feeling at the open homes?
Advice from your agent
Your agent is at the coal face of your marketing campaign, they are hosting open homes, fielding calls, sending contracts, following up attendees after inspections. They know how much interest there is in your property plus any positive or negative feedback. They know what the market is thinking about your property and are an important resource to tap into when setting your reserve.
Any offers and market feedback
It is important not to get sentimental about your property and set an unrealistic reserve. It is very important to talk to your agent, to review any offers and listen to market feedback from your agent.
Over the course of a sales campaign, even a 3-4 auction campaign, the property market can fluctuate and it’s important to factor these changes in when setting your price. You want to be “in the market” not “on the market”. Consider carefully are you prepared to sell for what the market is prepared to pay?
Not keeping and supplying all documentation to your accountant
Not keeping good records can really impact your investment profitability. Make sure you talk to your accountant about what documentation the ATO requires you to keep to support your tax return and claims. A safe suggestion is to keep all your receipts even if they are small, as it doesn’t take long for these to these expenses to add up.
Thinking you’ll save money by managing the property yourself
Although many investors are financially-savvy, when it comes to finding tenants, dealing with day-to-day property issues or legal jargon, they are left in the dark. Experienced property managers can help make sure you receive a reliable income stream, excellent capital growth and the best returns possible – as well as a guarantee of exceptional customer service.
Having the wrong insurance
Things go wrong and properties get damaged or are vacant – some tenants willingly damage properties, whilst other residences fail to attract tenants for an extended period of time. Not having the right landlord insurance to help cover damage and rental shortfalls can have a massive impact on an investor if they have to find the cash to make repairs or pay the bank back.
Not adjusting rent to market conditions
The market determines the appropriate rent and if you don’t take this into consideration you may end up pricing yourself out of the market. Tenants either won’t be able to pay their rent or you won’t be able to find new tenants to move in. We buy houses in Winter Park
Borrowing too much money and not planning ahead
Many investors can get over-confident when they have bought multiple properties – they think they are on a roll. However, refinancing can become an issue if the investor has borrowed to their limit. This is especially problematic given the tightening in lending restrictions.
Forgetting about the tenants when buying an investment property
Before you buy an investment, remember that it is not the same as buying a home for yourself. When you are looking at buying an investment property consider every aspect of the potential property from a tenant’s perspective – what would they value, what would they pay more for?
Choosing the wrong ownership structure
There is no ‘one-size fits all’ solution when it comes to structuring property investments because everyone’s situation is unique. However, many investors don’t spend enough time upfront planning the structure with their accountant and financial advisor, causing a great deal of trouble down the track.
Failing to have a long term strategic plan
Not knowing what you want to achieve with your property investment is not a good way to start. Many first time investors don’t consider their long term strategy.
When working out your strategic plan, think about what you want to achieve and when, immediate cash flow, long term capital growth, ongoing income in retirement, and funding of additional investments to name a few.
Not doing enough research and due diligence
Investments are big decisions, and they can go tragically wrong if investors don’t spend enough time doing their due diligence and researching the market.
Many investors use property investment companies to help advise them on what and where to invest. Whilst this can help people who are unfamiliar with the process, it is still critical that the investor double checks any suggestions from the investment service.