Monday, February 11, 2008
THE TOP 10 MISTAKES THAT EVERY First Time Investor Should Avoid Like The Plague - Part Two
Acting Too Fast And Acting Too Slow
Some people make quick decisions and change their minds frequently. Some people make slow decisions and stick with it. I think the best thing to do in this situation is to have a balance between the two. Some people make the mistake of getting so excited about a concept after they have attended a property investment seminar and go out there with very little research and attempt to implement what they have learnt. They either end up paying too much of select the wrong structure for investment.The ones that are too slow however, are so scared of making a mistake and of moving out over their comfort zone that they are paralyzed and miss out on all the great opportunities in front of them.
One important thing to remember is that investing is something that you may not be 100% comfortable with. Because you are going outside your comfort zone and attempting to do something that you haven't done before. There is always something a little unnerving about that. But you need to balance this fear by taking the necessary measures to do your research and cover all things that you are unsure of. That way you are able to move forward, but with caution. There is no point in making rash decisions and sometimes there is no point in standing still and doing nothing.
Over Estimating Income And Underestimating Expenses
It’s important to have some sort of a safety net when you are looking at investing. Most people either stretch themselves too thin when it comes to buying their property, or over estimate their current income and the rental income they will receive. You need to be able to take into account rental vacancies and other expenses that may unexpectedly pop up. Its best to do some research on rental income around the area, instead of just sticking to general rules and principles.
If you do feel like sticking to a rule, then the best one to stick to is to under-estimate income and over estimate expenses by around 10%.
Looking Short Term Instead of Long Term
Investing property is usually a long term thing. So its not a good thing to go into it thinking that you can make a quick buck and then leave a richer man. Most things in life don’t work that way. This usually will lead you into get rich quick schemes and deals that seem too good to be true. Because hey they usually are. The key here is to be able to hold a property for at least 10 years by which time it would have doubled. Its about reinvesting your capital and putting that into other property that will grow, which helps to create a solid asset base. A good quote to remember is “ Let time be your ally and patience be your friend”
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