5 Mistakes to avoid in property investment

Property investment usually involves huge sum of money and property investment are not as liquid as equities investment. Therefore planning well and giving sufficient considerations before investing is critical to a successful property investment.  

Before you start investing into any property, do take note of the 5 Mistakes to avoid in property investment.



1. Not knowing your investment objectives before you invest

Different people invest in property for different reasons. Some may invest for capital gain, some for rental returns while some is for their future generations as part of their legacy planning etc. 

In each of these circumstances, the kind of property to invest in and their selection criteria will be vastly different. For example, a property that can appreciate a lot in value in the future may not necessarily gives you the best rental returns. 

Be specific before you start investing. Know why you are investing, and the time horizon of your intended investment. 


2. Not doing your research

When purchasing an investment property, it is very important and essential to do your research about the property’s location, surrounding amenities, rental returns, ease of renting out and the attributes of the property itself.  Do take the time to understand the future developments around the property (ie URA masterplan tour), and how the future developments in that area will affect your property value. 

Be careful of “hot” investment or property investment scheme that promised a “too good to be true” investment returns. Always do your research and homework before committing into any investment. 

Alternatively, you can find out more through the regular seminars that we are conducting 


3. Over-borrowing without safety buffers

One of the best benefits of property investment is that you can invest using other people’s money.

This allows you to profit from other people’s money and it can massively increase the returns on your capital investment. However if you have overly committed on your mortgage loan and finding difficulty to pay it in the future, you may be forced to sell the property at a loss.

Always project your cash flow, and set aside sufficient emergency or reserve fund. This way, you will be prepare if interest rates were to increase, if there is a change in your income or employment status or if there is a change in your family situation (additional family expenses, illness etc). By having a safety buffer, you will not be caught by such life’s surprises. 


4. Too rush or hesitate too much

Sometimes I come across buyers telling me that they just walked into a showroom  (not intending to buy any property) and ending up buying a property. Later on, they regretted on their actions. Therefore in any property investment, do not act in haste. Plan properly before taking action. 

On the other hand, there are buyers who are over deliberate. They can take months and years to learn about property investment or where are the best deals, but never take any actions. They want to know that they will be buying at the absolute bottom of the market and to be sure that there are absolute no risk before investing. Before they know it, the market might have moved on already or someone else might have taken that great investment opportunity ahead of them. 

Do avoid both extremes. Do consider getting enough property investment knowledge and work together with a proven property mentor in your investment.



5. No protection against the unforeseen 

What if the most unpredictable thing were to happen? An illness, death etc. If the investment property still have mortgage loan on it, then who will be paying for it? Worse case, even after selling the property, there are still not enough funds to pay for the outstanding mortgage. 

Therefore after investing into your property, do seriously consider taking up an insurance plan or plan for some protection in case of the unforeseen. This will help you to protect your estate, and to ensure the property can be passed on the next generation without worries. 


One of the many ways to invest and finance your property investment is through leverage. If you have not heard of it or would like to find out more about what this method and the associated risks are, I wrote my thoughts about it here not too long ago.


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