Why Do Most Property Investors Get Stuck With Less Than 4 Properties?

Dilleen Property Group 2023

Property investment can be daunting for many beginner investors, especially if they are not sure what to look for when searching for a property. The main reason why many investors are stuck with less than 4 properties is because they are caught up on the wrong details of property investment.

Here are 3 significant factors stopping investors from expanding their portfolios:

1. Not Focusing On Rental Yield

Rental yield is one of the most important facets of property investing, however many beginner investors may not know what it is or how to calculate this figure correctly. Rental yield is the difference between the rent coming in and the expense going out. It is crucial that the property's rental yield is higher than the interest rate to ensure that you can service the debt and the other expenses that come with the property. Some properties may have a slightly lower rental yield therefore it is essential for investors to balance their portfolio to ensure that the yield from higher-yield properties can offset the loss of lower-yield properties.

2. Not Diversifying

Many investors make the mistake of only investing within the state that they live in. This is because they may feel more familiar with the area or they may have a certain preference for the suburbs within the particular state. However, it is more important to look into different property markets within the country and research the average price and the growth of the properties within these markets. Focusing on statistics and diversifying your portfolio across the different property markets will give you better results than just purchasing in preferred suburbs within the same state.

3. Emotional Investment

When looking for an investment property, it is often easy to get caught up with the emotional aspect of investing. For example, the appearance of the property, the location of the property, and the property type can have an influence on whether an emotional investor would want to purchase the property. By removing this emotional attachment and focusing on facts and figures such as the rental yield of the property and purchasing in a metro area and below market value, the investor is more likely able to further expand their property portfolio.

Conclusion

If you’re looking to grow your property portfolio significantly over the long term, it is best to buy below market value, pay attention to the rental yields of the potential properties you plan to purchase and also diversify into other property markets across the country to gain access to more options that offer a better deal. By removing emotional bias towards property investment and only focusing on statistics, you will make it easier for yourself to further expand your portfolio. If you require assistance in building your portfolio or have an inquiry about what investment strategy to use, feel free to contact us here to learn more about our services and investment strategy.

Disclaimer: This is not intended as legal, financial, or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature, you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.