8 Obstacles to buying an Investment Property
There are 8 obstacles to buying an investment property. Most Australians realise they must do something other than rely on their superannuation to ensure they have enough to retire on. Paying off the mortgage, adding to super, and putting some savings aside may not be enough to secure the kind of equity needed to have a comfortable retirement.
Property is a widely recognised safe investment, based on solid returns over the last 80+ years of performance history, yet many Australians will never make the first step towards this -- despite knowing the advantages of having a property portfolio.
There are various reasons why people are wary to take the plunge and commit to this type of investment, some of which can be dismissed as myths or excuses, so let’s look at eight common obstacles that stop people buying an investment property.
1 Failing to bring their life strategy ‘blueprint’ up to date
The blueprint for life that many were taught growing up simply involved getting a good job, buying a house, paying it off, then retiring off superannuation and the pension. End of story.
While it may have been relevant for previous generations, times have changed, and many are learning that this traditional approach may not work in these modern times.
The lifespan for previous generations was shorter than what it is today, and therefore the retirement savings required were proportionately less. The strategy plan that was programmed into us from a young age is no longer applicable to the times we are living in. The lifestyle we live has changed, and we want to drive that nice car, go on holidays, and enjoy the longer lives that we are living.
We need to reassess the blueprint and ask ourselves “Is what I am doing today going to ensure that I have enough funds and savings for retirement?”
2 Listening to negative stories
Many people have heard or experienced a negative story about failed investments and money that was lost. It is wise to learn from other people’s mistakes, but these stories must be examined carefully, and we may learn that it was not the idea itself but maybe the approach could have been better.
When you take people’s horror stories to heart, you will never act. Other people’s mistakes do not have to be your mistakes. With information from a reputable and qualified advisor who can empower you with the right knowledge, you can minimise the risk and increase your profit.
Most times, when people have failed with investment, it is due to a ‘get rich quick’ scheme. Whether it is stock or properties, riches are gained from a long-term strategy.
3 “It’s too confusing/I don’t know where to start”
Investing can be confusing. Knowing where to start, what to buy, and what is right for you can be a lot to take in. Everyone situation is different, and the journey to wealth creation can take a variety of paths.
There is plenty of information out there, but this can also be overwhelming. A simple search on successful property investment tips will produce hundreds of tips, with some of the advice being conflicting. That is why it is essential to cut through the noise and access advice from a professional.
Education is key to getting a better understanding of what is best for you. It will allow you to seek out the next level of advice and ask great questions that will enable you to move forward.
4 Fear of losing money
Fear is one of the most significant reasons why people fail and add losing money to the equation, and it makes it even more terrifying.
While it is natural to feel this way, we can find guidance from famous adventurer Bear Grylls, who once said “Being brave isn’t the absence of fear. Being brave is having that fear but finding a way through it.”
The best way of overcoming fear is taking that first step, and every other step becomes more effortless.
It also helps to remember that your goal is to make money, and you cannot make money without taking a risk.
5 Not assessing their position
A lot of people do not realise that they can invest in property. This may go back to their misaligned blueprint, or they have been living day by day and have not taken the time to have their financial position assessed.
Once people really examine their financial position, perhaps with an adviser, most people are shocked to discover just how much they can do. Even if you do not have enough right now, you can start a plan and take steps to get you on the right track.
6 Worry about being in debt
Not all debt is created equal, as there is ‘good debt‘ and there is ‘bad debt’. One example of bad debt is a car loan for the late model V8 you finally bought. While it is definitely giving you a great amount of personal satisfaction, the financial value of asset will lessen over time. A loan taken out for a property purchase, or even a student loan is a good investment which will prove its value in the long run.
Property is the largest type of purchase made in anyone’s lifetime, so it is understandable why someone would not rush in without weighing all the factors.
With the power of leverage, you can educate yourself on the positive benefits of good debt and soon discover that not all debt is bad. If you still have a fear of debt, then consider if it is more important to you not being in debt and not making money, or being in debt but being able to make money.
There are those who have recognised that a property investment is indeed a good idea, but still put it off. “I’ll wait and see what happens” or “I’ll wait when the market is better” are among the common excuses some may have. While this may be valid in some instances, opportunities are also lost when the right time has come and gone.
They say that a game of football cannot be won on the sidelines and that is true you have to get in the game to win. Staying on the sidelines and procrastinating is not going to make you a fortune. You need to step on the field and get into the game.
Engaging a specialist to understand your situation better and put together a plan is a great way of preventing procrastination.
8 “She’ll be right” mentality
Even worse than procrastination is the carefree attitude that is characterised by the common Aussie saying, “She’ll be right, mate.”
Many are content with the effort they are making, plodding through their 9 to 5 jobs, and believing that everything will fall into place on its own. We have already established that the traditional blueprint for life and retirement will not cut it in these modern times, so people need to realise that the absolute minimum will not see them through a comfortable retirement.
The government has already increased the retirement age and are looking at increasing the superannuation contribution. Though these changes may help a little, it is simply not going to be enough for many of us.
Most Australians do not realise that they have a choice available to them right now that will dramatically change their outcomes for the future.
Your next step
While these are not all the obstacles or excuses, it is a good starting point to understanding what is holding you back from securing a better life for yourself. Whichever is your excuse your next step would be to contact a specialist to assess your current situation and put together a plan to get you out there making some real wealth through property investment
It’s best to compare and contrast to find the ideal property. Make smart and worthy investments through Makes Cents today.