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Why do some property investors fail?

Zaki Ameer

There are more than two million property investors in Australia today, but a majority of them are struggling to grow, or maintain, their success.

According to onproperty.com.au, only 18 per cent of investors own two properties and less than 1 per cent own five or more, which suggests many investors are struggling when it comes to building their portfolios.

Although any asset is an achievement in itself, success to most property investors is determined by their ability to continue purchasing real estate. Unfortunately, so many Australians save for their entire working lives to be able to afford an investment property, but once they achieve this, their progress often remains stagnant because they aren’t sure what to do next.

Here are the five ways investors experience failure in their portfolios:

• Being selfish. When a person is investing such a large amount of money, it’s natural for them to want it to be something that they consider ‘perfect’. When it comes to real estate, however, rather than purchasing a property based on personal preferences, it’s crucial to prioritise the wants and needs of the target tenant. If an investor puts themselves first, they not only decrease the pool of prospective tenants, but they also risk making emotionally-charged decisions.

• Impatience. When it comes to property investment, patience is definitely a virtue. Real estate is a long-term commitment, and a common example of an investor failing to reach their target financial outcome is when they lack patience and flip the property for a short-term gain. In order to increase capital growth and guarantee rental advances, a property needs to be held for at least seven years.

• Not taking responsibility. There are often numerous parties involved in purchasing an investment property, and a common mistake among failed investors is to blame others for issues that arise. Although certain tasks may be managed by particular people, the responsibility of the property ultimately lies with the investor. If something goes wrong, it is crucial to take accountability and work to rectify the situation rather than passing the blame.

• Hesitating. Countless investors experience ‘analysis paralysis’ and overly scrutinise any potential purchase to ensure the property is ‘perfect’. Although it’s always important to make an informed decision, if an investor has done their due diligence and is comfortable with the return, it’s important to buy without too much hesitation to avoid missing out.

• Doing it alone. In order to cut costs, many investors attempt to find, purchase and manage a property alone. Although this is possible, for most, it results in failure or having to spend more in the long-run to rectify problems that arise. To guarantee success, it’s important to enlist the help of professionals who can ensure the entire process runs smoothly and with the investor’s best interests in mind.

Many people avoid investing in property out of fear of failing. However, with Australian real estate prices historically doubling every seven to 10 years, with the right mindset it can be extremely profitable.

Zaki Ameer, director, Dream Design Property

Why do some property investors fail?
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