Property experts stunned at low investor knowledge

Property experts are continually surprised at how some investors get started in the market without knowing more about the entire process and educating themselves.

Offering commentary on Switzer's Home Loans website, Margaret Lomas, founder of Destiny Financial Solutions, likened the current new investor mentality to a doctor who was content to 'jump in the deep end' in order to learn.

"They figured that if they got it wrong, they would learn from that, and if they just followed the crowd and performed operations as everyone else did, they had a pretty good chance of success.," she said.

"Sounds mad, yes, but this is how most property investors get started. Either they have a notion that they would love to buy property, and away they go, or a property presents itself and so the decision is made to become a property investor, based on the opportunity which that one property presents. It’s little wonder that people make grave mistakes, often bad enough to turn them off property investing forever.

"Like the doctor who must remain at the top of their field through constant and ongoing education and through consistent fellowship with their peers, you must understand that property investing is a vastly changing landscape, which needs constant re-learning.

"It is ultimately linked to our economy, so we must constantly review not only what we are doing but also what we will do."

Lomas says before any property is purchased, the basics must be in place.

"This includes a complete understanding of not only your current financial position, in terms of income, expenses, assets and liabilities, but also of the time you have available until retirement.

"This is a crucial element that most people miss – what you buy, and where you buy depends on many things, but one important consideration will always be the length of time you have available during which to hold the property."

She says don’t fall into the trap of thinking that, once you have read a few books or attended a few seminars, your education is finished.