Why would I fail as a property investor?
The real estate market of South Africa is a volatile and competitive industry, and yet, it offers savvy investors a wide range of lucrative wealth generation opportunities. In this article, we will explore some of the reasons why many investors fail to achieve the growth and profits that they seek.
Lack of Research
As an investor, you need to arm yourself with a thorough insight into the dynamics of South Africa’s real estate market. If you go unarmed and without conducting any research, you may fall prey to the pitfalls and make mistakes. This is very generic and should be more catered towards what we look at when we are analysing deals. ”It is important to conduct thorough research into the current market value of the area, sold comparable, tenant payment behaviour and rentals as well as government subsidies and incentives that may be available.” Research is a constant process that needs to be conducted rigorously as it allows you to make informed and pragmatic decisions.
Chasing Quick Profits
If you think it’s too good to be true, it probably is. You can generate long term income and build up a solid portfolio but don’t think that it will happen overnight. Chasing trends and looking for the easy deal does not usually go your way.
Remember, the wrong strategy is almost as bad as having no strategy at all. Many investors seek tax benefits over long-term returns and there are strategies that support these tax benefits but you need to consult professionals to ensure that you are approaching this in the right way.
If you are purely investing for quick gains, then the property market might not be for you. When it comes to property investment you need to take a long-term view and be realistic. Perhaps, you are interested in property investment but you are fearful and have no idea where to get started. Become a Free Member at www.joinsapin.com to learn and network with property professionals and like-minded investors.
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Being impatient or making unrealistic plans is the easiest way to lead your portfolio towards disaster. Overnight success is a myth, and in real estate investments, you need to be meticulous and diligent Planning to buy 10 properties in 10 years or less could be an unrealistic expectation that can cause you to fail on your property journey. However, each person’s circumstance is different and if you have to allow yourself the time and patience to grow realistically and add more properties to your portfolio.
No Financial Buffer
Cash flow shortage is one of the many reasons property investors fail and it is extremely important to protect yourself with a financial buffer. In lean times, a financial buffer will help you protect yourself against financial woes if your properties or major source of income is compromised.
Many investors fail to recognize the need for financial buffers. Property investment is a financial game, and if you don’t have savings for your rainy days, you will find yourself compelled to sell off during a bad market. We always encourage that you factor in at least 10% of the Monthly Operating Expenses (MOE) and put this aside for unexpected expenses.
Many investors make the terrible mistake of thinking that they can build more equity and security by adding more and more eggs to their basket. So, in a bid to cement their portfolio’s growth, they end up investing in all kinds of real estate markets and sectors. In the end, they find themselves struggling to maintain their investments and staying liquidated. In order to avoid this, ensure that you are constantly aligning to your strategy and goals. Don’t make emotional decisions and keep running the numbers.
If there’s anything the last decade has taught us, it’s the fact that one needs an extra source of income to be financially independent. The indisputable truth is that the property industry is very attractive and remains known as the best investment on earth so far. Our CEO and founder of SA Property Investors Network and The Property Academy, Andrew Walker says maintaining that property investment is a great vehicle to build wealth and create a legacy. The possibilities are endless but ensure that you are walking the journey with the right team in place.
Over the years our network has created new opportunities for both current and aspiring investors. Today, SA Property Investors Network is one of the largest property networking communities that strives to help you find a solution to your property challenges. While reinforcing the culture of investing, we enable like-minded investors to network share their strategies and partner with power team members and property professionals.
Find out how you can join our network at www.joinsapin.co.za