property investment
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Some Mistakes for Property Investment
Falling in love with a property 
When most individuals think about buying an investment property, they consider it and determine 
whether they like it and would want to live in it.
This is the scenario that salespeople hope to see. They’ll be seeking for two or three potential 
purchasers to adore the same property and drive up the price as much as possible.
The power of emotion is why auctions are so effective – customers become swept away and 
continue to bid even after the budget has been exceeded.
If you happen to fall in love with a home, you will almost certainly pay more than you should, and 
then struggle to let go when the time comes to sell – both of which may be costly.
Keep in mind that the properties you invest in should make you money over time. It’s all about the 
numbers and how they’ll help you achieve your long-term objectives.
Trading property 
Trading real estate as a source of income may be a good way to make money, but it isn’t always the 
best approach to accumulate wealth. Even if you sell your recently remodeled property for a 
substantial profit, your day job earnings aren’t that different.
Before you see a penny of your pay, you must pay tax on a job. The government will take its cut via 
capital gains tax before you see a cent if you trade property.
You’ll also have expenses for agents, legal bills, and other financial charges. As a result, your earnings
are continually being taken away by other interested parties eager to get their piece.
I’d suggest hanging on to it as long as the property is profitably geared or cash flow neutral. You’ll 
profit from the capital growth over time, but you’ll also begin gaining residual income through rent 
once the home begins working for you.
The accumulation of assets, not the trading of assets, is what produces true financial wealth.
Negative gearing
Negative gearing is the practice of purchasing a home and then renting it out. If property values are 
increasing, this usually implies that your rental income will not cover your mortgage installments, 
strata fees, and other operational expenditures.
This is how it works: Each month, you must cut back on your savings or divert money from your day 
job to make up the difference.
The banks and accountants claimed that as long as you could meet those extra cash flow demands 
for a few years, the rent would rise to cover them, and you’d be O.K.
In other words, your tenant would be paying off your mortgage while you keep the appreciating 
asset and any additional income from the rent. This means you won’t have to pay any taxes since 
your property is losing money.
Forget about any potential tax savings – If the property is costing you money and consuming a 
portion of your earnings or salary, it’s keeping you in a job. It’s not assisting you in any way.
If building wealth is causing you to be consumed with worry, it may be time to reconsider your 
approach.
I’d advise you to do a thorough study and only invest in houses that are cash flow neutral or 
superior. The home could then repay your investment without requiring any further financial input 
from you.
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