There’s a totally unfounded, bizarre and very dangerous myth about property investment- That it’s a way of making money for nothing, and money just rolls in. Tell that to any professional property investor, and they’ll recommend a psychiatrist at the very least. You really do need your wits about you when buying investment property of any kind.

Property investment disasters, defined

The typical property investment disaster involves getting lumbered with costs and/or value issues. Buying a property you can’t sell or costs a fortune to fix is money down the drain in a particularly unambiguous way.

These are the classic disasters for property investing:

•Buying an investment property that has title issues- These issues can be access, easements, land use problems, zoning, you name it, there’s a virtual dictionary of these issues. They cost a fortune to deal with, if you can deal with them at all. They’re a built-in mechanism for reducing return on investment. They can also amount to a net loss.

•Building or site issues- Another great lexicon of massive costs, buildings alone can provide years of problems. Structural issues, drainage, subsidence, building approvals and other problems can turn an investment in to a great way of spending money. Extra outlays in the six digit range are now quite common.

•Financial balancing acts- A common denominator in failed property investing is the inability to hold on to properties because of costs. This can be a DIY disaster, brought about by a combination of outlays and situations where balancing is quite literally impossible. It’s called “financial overstretch”, and it can be a real mess.

•Valuations vs. market- In this scenario, you buy at one price on valuation, the market offers you something much lower or too low to be worth it. This is a true trap for the inexperienced, and it’s also a great way of derailing even an otherwise successful investment portfolio. Like the financial balancing act, the numbers are nowhere near where you need them to be.

Dodging the investment bullets

When you buy an investment property, the common denominators to the disasters can be defined in two words- “Wrong information”. At some point, investors have acted on incorrect assumptions.

Professional property investors are careful by definition. They may have their inspired moments and find good deals, but even that doesn’t stop them from being extremely careful. They have a literal information network set up to get their property investment advice as parts of a meticulous approach to avoiding risk.

The typical advisory network includes

•Professional property advice services- These services include a lot of sources of information which are based on statistics, market analyses and other types of fundamental market research information sources. This is also a very effective method of assessing valuations and market issues.

•Legal advice- Another critical area, and extremely important in avoiding the title issues and building problems associated with contracts.

•Financial advice- Basic to investment in terms of returns, this advice is based on real time assessments of ongoing and future commitments. The best way to avoid the financial balancing act is not to get into that situation in the first place.

When you’re thinking of buying investment property, start by making sure you have the right information. The rest is comparatively easy.