So you want to buy a rental investment, but you’ve heard a few things that you’re not quite sure about, which means you’re cautious about taking the next step. Never fear because here are the top 6 property investment myths - busted!
1. It’s all about making money
This one might sound a bit confusing - people certainly don’t get into buying rental properties because they are bored.
But what this means is that if you do get into investment, it shouldn’t just be about wanting to make money for the sake of it. You should have a plan, and a goal about what it is you would like to achieve in 5 years, 10 years, and when it comes to retirement. Without any direction, you could struggle to get the best out of the decisions you make.
2. Any house will do
Sorry, but it can’t be expected that you will just buy any old house and find tenants for it.
Sure, some people get lucky and this does happen. However for a majority of investors, this is not a good idea. You need to look at several factors - such as the best suburb for investment, what kind of property is it, who will potentially want to live there, and what kind of condition it is in (it may need a renovation to bring it up to a suitable standard, as well as meeting current legislation). Do your homework, don’t just take on the first thing you see.
3. Only the very wealthy can be investors
Yes, it is easier for wealthy people to become investors. But it’s a myth that you have to have large amount of money in the bank in order to secure an investment property.
Everyday people, with ‘ordinary’ incomes, can become investors too - you just need to have a good understanding about the market, and the right people to help you along the way. With equity in your own home, or a reasonable deposit, it is possible. Sure you may not get a high-end home in an inner city suburb, but that doesn’t have to be your first goal.
4. It is easy to manage a rental property
A lot of people getting into property investment think that they can save money by managing their own rental. And that it will be easy, but that is definitely another myth busted.
Again, there is a small minority who have the time and capabilities to ensure everything runs smoothly when it comes to looking after tenants, collecting rent and organising maintenance. But most people don’t - and it can be very overwhelming when it comes to dealing with situations that require dispute resolution or legal matters.
5. There is no such thing as good tenants
The news is very good at reporting on bad tenants, because there is simply not much of a story about those who respect their landlord’s property and pay their rent on time.
So sometimes we can all get caught up in worrying that every person who applies for a rental is going to trash it. But this isn’t true at all. You shouldn’t let the worry of bad tenants get in the way of property investment - you just need to be cautious, and hire an experienced property manager to help mitigate any potential risks.
6. Property investment is way too risky
Every kind of investment is risky, in fact, even just walking down the street could be at your peril if you really think about it. What’s important is understanding what level of risk you are most comfortable facing, and how that can be managed if you do decide to invest in property.
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