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Lily Adrianne, a model, entered the real estate market at a young age. At just 25 years, she had invested in 11 properties in Australia and New Zealand. Live wasn’t always easy for Lily. A few years ago she was broke with a jealous boyfriend that was holding her back from her dream of modeling. It wasn’t until she had the courage to confront these obstacles that her modeling career took off and she found her passion for property investment.
Her interest in the real estate market was cultivated after buying the first house in Auckland at 24. Lily has made and learned from a few mistakes first-time property buyers make. Here are a few insights you can learn.
1. Buying Property Based on Appreciation
Many investors purchase property on the assumption that the property will appreciate in the next few years. Lily, explains that this is not always the case. The model realized that rental properties were especially susceptible to price fluctuations from year to year. Sometimes an investor needs to sell the property unexpectedly, settling for a lower value than the actual market value. As such, investors should invest based on the property’s incoming cash flow. Studying the property market beforehand goes a long way in finding the right property for your investment portfolio. The seller should also provide a year’s analysis of the rental property in writing to help you understand its potential.
2. Buying Too Large
The model entered the property market a bit too enthusiastic, having bought at least 11 properties in one year. While the investments are paying off, Lily realized that it’s better to start small as a new investor. Buying too many properties at once means you need to deal with high property taxes and more maintenance costs.
3. Missing Contract Items
Some sellers omit critical details in the contract causing the buyer to spend more money after the sale. As such, it’s essential to go through the contract before signing to identify any details omitted on purpose or otherwise. It worth the cost to find an experienced person to look over the documentation to identify what should be in the contract and find any missing information. During her shopping spree, Lily found a property whose garage had been removed without the Surveyor making a final inspection with the Council. If her realtor hadn’t picked it up, Lily would have inherited the problem.
4. Signing up for the Wrong Insurance
Insurance is a critical aspect when investing in any property. It ensures your property is protected in case of natural disasters like flooding. Sometimes buyers sign up for the wrong insurance, which may not compensate them for damages made on the property. The right insurance should be tailored to the buyer’s needs while considering multiple factors specific to your situation.
5. Underestimating Maintenance Expenses
As a first-time buyer, it isn’t easy to underestimate how much expenses will cost. The rule of thumb is to overestimate the costs to avoid surprises. Also, make sure you have enough cash reserves in the bank to cover unexpected expenses.
6. Not Looking into Enough Properties Before Buying
This is one costly mistake Lily made when she bought her first property. She took the first offer and paid full price. The model learned it was critical to compare multiple properties even after finding the right one. It gives you a rough idea of what to look for and the ideal buying price.
7. Buying a Property in a Depreciating Market
The motivation for buying a property in such a market is the low price, but experts warn against such investments. This is because properties in such markets barely generate returns. The rent rate is likely to take a downward turn, which means you’ll be earning a lower income and losing equity on a depreciating property. Perform thorough research before committing to making payments.
Property investment is an excellent way to achieve financial freedom. Lily explains it has been an excellent way of earning a stable income apart from her modeling career. Avoid these mistakes to reach your goal faster and unlock your financial freedom.