How do you overcome the fear of investing?

Property investment in Australia has proven to be one of the most successful ways of building wealth, freedom and security in the long term.

And yet many potential investors are derailed from their dreams by Fear. In other words, it’s emotions that get the better of them, rather than the facts and figures.

Aside from infrequent periods of sudden price growth, property prices usually move relatively slowly and steadily. They may even flatline for several years, even if you’ve bought well.

At times like these, investors may give in to Fear. Almost invariably, these delays cost investors far more than they save.

So while there’s nothing wrong with a careful approach and thorough due diligence when it comes to property investment, Fear, should never prevent you from realising your goals.

What if I invest in the wrong property?

But what does the wrong property mean? It means a property that is not performing well in the market, or is too costly or time consuming for the investor to hold. This could happen for a number of reasons:

The property is in the may be in a rural area with little employment demand, or over-reliance on a small number of businesses
There is insufficient rental demand, making it difficult to earn higher rental yields or one at all
Maintenance costs could be too high if you buy an old or run-down property
The property was out of financial reach

The above problems can be avoided by doing your research:

Invest in a location where demand is higher than supply, with good population and strong employment trends
Look at rental demand for specific property types within the suburb to ensure that the property type you’re buying is in demand
you can avoid maintenance costs by buying new property
Don’t buy a property that is out of reach in case circumstances change for example, an interest rate rise.

What if I can't keep up with the repayments?

Buying in a suburb with a steady flow of rental demand is important. Having a long line of tenants lining up to rent your property is the first step to ensuring you have strong cash flow coming in. However, don’t buy a property out of reach, It’s more important to be prospering in 10 or 20 years,

What if Interest rates rise?

If it makes sense, you can consider borrowing via a Principal and Interest loan instead of Interest Only. This could increase your repayments and reduce tax deductible interest slightly, but it does give you the peace of mind of a steadily reducing loan balance.

You can also leave a buffer in place. This could give you peace of mind in case interest rates go up further.

What If I have trouble finding a tenant?

This can mostly be avoided, the strategy is to pick a property with consistent rental demand, close to amenities, transport and schools. Good properties have really low vacancy rate.

What if I lose money?

With solid research and tax savings, it is difficult for a property investment to go wrong, however, if the worst case scenario happens and you truly believe the property will continue to underperform in the future, it may be wise to sell the property and buy one that will perform better.

The Next Step

The first step is to overcome fear is to have a solid strategy and clarity about your goals.

The Next step is to ensure you have solid research, for the best up-to date advice, a good idea is to contact a professional, this will allow you to purchase an investment property comfortably without fear or uncertainty and to save you time. A professional will help formulate a investment strategy, do diligence and negotiate prices on your behalf and will be with you from start to finish, ensuring a smooth investment journey.