One of the main reasons I started to write about money was to share the many mistakes I have learnt in my ongoing journey to wealth. I’ve mentioned before that I purchased my first investment property at the age of 24. This blog is about my current and future financial position so I’m not going to rehash every purchase I’ve ever made. That said, by jumping in so deeply at such a young age I had a very steep learning curve. Investment fundamentals hardly ever change, so I think sharing my real estate investment mistakes may help a new investor to refrain from making the same ones.
My Real Estate Investment Mistakes
Mistake 1: Not buying earlier
In 2002 I was in a permanent full-time job. The house I had spent my early childhood in came up for sale. It was purely emotional but I loved the house, a 1920s character bungalow in an up-and-coming area. My parents had purchased it as their first home in the late 1970s for $15,000. They sold in 1995 for $87,000. Seven years later the asking price was only $4,000 more.
I met with a mortgage broker to talk about finance. My income was enough to service the loan and I intended to get flatmates to help with the payments. For some reason – which I still cannot pinpoint – I didn’t pursue it. I didn’t even look for other smaller properties. I just walked away. I’m chalking it down to being 20 years old and wanting to enjoy my life – then. But I still regret it. The house is now valued at between $290,000 and $320,000. I would have around $250,000 equity now had I gone ahead with the purchase and paid the minimum on a 30 year loan. I could have been very close to early retirement now had I purchased my first house in 2002 and another couple in the years preceding the boom times of 2004-2007.
Just some of the growth I missed out on by not purchasing earlier – my first real estate investment mistake.
Unfortunately, it wasn’t until 2007 that I began to get interested again. By this time I was living in Sydney earning $45,000 per year working in the head office of a large travel company. My partner (now husband) earnt about $60,000 per year. We lived in a share house with very low expenses. We were the bank’s dream clients.
The world was in the midst of an enormous bouncy credit bubble, property prices were rising faster than ever before. Developers all over the world were accessing easy credit to build over-inflated homes for people who had never been so rich in their lives.
I began reading anything I could find on the topic. First I got every real estate investment related book I could find from the library. Then I started buying books. In those crazy days there were many ‘property education’ services charging thousands for access to their ‘knowledge’. I reasoned that book purchases were education costs – a couple of hundred on some perspective-altering books seemed a solid investment.
One of the most common themes I read about was Analysis Paralysis – the act of over-thinking something so heavily that you never take action. I had a few grand in the bank, a trusting partner and youthful optimism. I was ready to take action. No analysis paralysis for me.