Tony Law: Today let me share with you 10 big mistakes that I think lots of you property
investors are making.
Hi, my name's Tony Law from Your First Four Houses.
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Tony Law: In preparing for this video I had a list of about nearly 50 different mistakes
I think new property investors tend to make when they're just starting out.
I'm not going to put you through that list, I've trimmed it all the way down to just 10
big mistakes that I think new property investors tend to make.
Tony Law: Let's get started.
The first one is, not knowing your investment objectives before you start investing.
Are you looking for cash flow today?
Are you looking for long term capital growth?
Are you looking for a mixture of both?
You need to decide what your investment objectives are before buying investment property, number
one, and you then look for properties that align with that investment objective.
Tony Law: Next one, waiting for the perfect property to come along.
I am so guilty of this, that's what I started to do when I first started out.
I had a bit of money to invest and I was looking for something that was a perfect deal and
I found something that was really quite good but it wasn't perfect so I didn't do the deal.
I let it go.
Six months then went by without me finding anything that compared with that.
Don't make my mistake, don't wait for that perfect deal to come along because you might
be waiting for some time.
Tony Law: Along a similar vein but on the other side is, don't become a motivated buyer.
By this, what I mean is sometimes people have a lump of money in the bank.
They've realised that property investing is where they need to be and they're becoming
motivated by it, they're looking to buy anything, frankly.
That's not what you should be doing.
Having the money in the bank is wonderful, it gives you an opportunity to go out there
and take lots of action and find a really good property.
Maybe not that perfect property as we were just talking about but find a really good
property.
Then do the deal, don't think that you've got to spend that money today.
Tony Law: Next one, letting emotions overrule investment logic.
You're never going to live, well hopefully not, you're never going to live in this rental
property.
I think that what you should be doing is using investment logic to decide whether you should
buy that particular property.
What do the numbers look like is the big thing of course.
Also, look for other factors as well and I've done videos on this kind of thing.
Buy for investment logical reasons rather than emotion.
Tony Law: Next one, doing insufficient due diligence.
Now, I personally think I can now search any property in the UK in about 15-20 minutes
but it's taken me quite a long time to be able to do it in that short amount of time.
What you should be doing initially is doing loads of due diligence ... Bit of a tongue
twister there, due diligence, maybe taking a few hours to really research that first
or second property before jumping in and putting your money on the line here.
You've got to get good at doing that and then only in time can you start to refine down
how long it actually takes you.
Tony Law: Next one, not getting appropriate financial advice.
Now again, I talked about this before.
You should have a competent tax adviser on your power team, somebody that you can phone
up and he'll give you advice on how you should be buying that property.
You need to have a competent independent mortgage broker that you should be speaking to and
he'll give you advice that's appropriate for your set of circumstances.
Tony Law: Then, last but perhaps most important, you should have an accountant.
Go and sit down, spend the money that is required and get his financial advice.
Then, and only then should you be taking action.
Next one, paying too much.
Now, it's ever so easy to find a property, that's on the right move, that's already on
the market, it meets pretty much all of your needs and you go in either close to or on
the actual, what they're asking for the property.
Tony Law: You know what?
Just because they're advertising it for that, that doesn't mean that's what you should actually
be paying for it.
Work out what the deal is actually worth for you based on your experience, and I appreciate
it takes time to build up that experience, that's what you should be paying and no more.
If it doesn't work for the seller that's okay.
Put it in some kind of a follow-up system and if they haven't sold in three, six months
time or even four to six weeks time then you go back to them.
You say, "How you doing?
Are you interested now?
Can we do something with this property now?"
Don't pay too much for that next deal.
Tony Law: Next one, underestimating refurbishment costs.
Now, wow have I paid too much for refurbishment of properties over the years.
Now I kind of think I've got a pretty good handle on what the costs should be.
When you do property number one or two, let's be honest, you're probably going to overpay
for some of the refurbishment costs but note down all of the costs, all of your expenses
in property number one and two and three.
Each time you do that next property, you can go back over those costs and say, "Actually,
what did it cost me to build that acoustic wall?
What did that on suite bathroom actually cost me?
Let me look back at my figures."
Tony Law: Next one, keeping up to date with rent rises.
Now, I know that's a bit of an old one but when you start to build a bit of a portfolio
and you've got a few properties and maybe you've had them for a few years, what you'll
realise is that sometimes tenants keep very, very quiet because they know they're paying
less than the market rent.
They don't want to bother you.
They might not want to bother you because they're simply lovely people, that's absolutely
wonderful, but sometimes tenants look at the market rent around them and they're aware
that actually they're underpaying slightly so they keep very, very quiet.
Tony Law: What I now do every single year is I look at my properties on a specific date
and I go and look for comparables out there.
"If I was renting this property today what would I actually be renting it for?"
By that I mean I don't automatically put the rent up.
I look at comparables and if it is actually slightly below where it should be then I'm
going to be speaking to that tenant now.
Sadly, unfortunately, the price is going to actually be going up.
Tony Law: Lastly, investing for the long term.
I personally think lots of people are making short term decisions when they're building
their property portfolio.
Where I now come from is I look at a property and I think to myself, "Do I actually want
to keep that property forever?"
If the answer's yes then that's a really big tick in my book and then I will probably be
buying that property.
Tony Law: I hope you found that helpful.
For more tips and tricks like this, be sure to subscribe to my channel.
Also, make sure that you take away this 50 point checklist, what are things that will
really help you the next time you want to buy an investment property.
My name's Tony Law from Your First Four Houses and I look forward to seeing you in the next
video.