Getting the wrong tenants into a property is the worst mistake investors can make, according to a poll of experts and landlords.
Landlords.co.nz conducted a survey on its Facebook page and asked prominent industry figures what they thought was the biggest hurdle to successful property investment.
On Facebook, most investors said the wrong tenants were the biggest problem for landlords. More than twice as many respondents picked that option compared to the next most common choice, which was overleveraging.
Lack of financial education and experience, over-capitalising and buying in the wrong area were other common mistakes identified.
Auckland Property Investors Association president David Whitburn said the worst mistake someone could make was a toss-up between not buying in strong areas, heavy negative gearing, poor tenant selection and management practices, and not taking appropriate risk mitigation procedures, such as income protection, insurance and interest rate averaging.
“Probably poor tenant selection and management practices is most common.”
But renovation expert Jane Eyles-Bennett said a lot of people went horribly wrong by buying the worst house in the street and expecting to make a profit simply because of the poor condition of the property.
“This is the worst way to make a profit unless the numbers stack up. What people need to do is assess every single property, on the numbers - what it costs to buy, what the true cost of the reno will be and what the realistic selling price or re-valuation is going to be, before they go ahead and begin a renovating for profit project.”