A study declared Britons as some of the wealthiest people in the world. This same study named London as the dollar-millionaire capital of the world, with more than 400,000 people (or about 3% of the population) having more than $1 million to their name. They make up almost half of the UK’s 840,000 millionaires, most of whom built their finances on the back of property investments.
At the same time, however, many property investors still haven’t achieved the success they want. This is primarily because amateur investors do not realise property investment may be manageable, but it’s not easy.
There are a number of ways you could be losing money on your properties, and you may not even be noticing it.
1. Lack of Plan
Not having a sound strategy means you easily get distracted by so-called “opportunities” that keep popping up, many of which are not as good as they sound. Buying off-the-plan, “hot spot” properties, for example, may sound like a good idea for now, but a few years down the road and you may see it underperforming. It could just end up costing you money.
Experts at Chase Evans recommend building a substantial asset base first, and increasing these properties’ value over time through renovations or redevelopment. Lowering your loan-to-value ratio as quick as you can means you can live off your property portfolio sooner.
2. Not Managing Risks
Smart investors do not just buy properties; they also invest resources to help manage the property and all risks associated with it.
As business magnate Warren Buffett puts it, you don’t need to be an expert to achieve great returns. If you’re an amateur, for example, you only need to recognise your limitations and get the appropriate help to make things work.
3. Falling for Get-Rich-Quick Schemes
While others are looking for that one big deal that’ll make them an overnight millionaire, you should set your sights on and be focused on the long-term instead.
When promised quick profits, respond with a quick “no.” The right investment takes time. “Wealth is the transfer of money from the impatient to the patient,” as Buffett explains.
Many of today’s millionaires worked hard for their money. They didn’t just invest in a property and became millionaires the next day. They built their money by knowing where to put it, how to make the most of it, and knowing where they’re losing it.