4 costly mistakes to avoid when investing in property

The interesting thing about investing in property is that even when you know the rules, there are still ways you can end up paying more than you should. Let's dive into the four most common mistakes investors make - and how to avoid them.

1. Buying the wrong asset 

The biggest (and costliest) mistake is choosing the wrong property. Many investors assume that because they've lived in a home, they know how to pick a great investment. But residential real estate isn't like other investment markets - it's dominated by emotional owner-occupiers, not rational investors.

Why it matters: 

• Low growth potential: Poorly chosen properties often underperform, achieving limited capital growth compared to well-selected assets. When compounded over time, the gap can be enormous.
• Missed opportunities: Without scarcity or strong owner-occupier appeal, properties struggle to gain value, leaving money on the table.

2. Procrastination 

The second way investors pay is through inaction. Waiting for the 'perfect time' to invest, or endlessly researching without making a decision, has a hidden cost that compounds over time and is one of the most expensive mistakes you'll never see coming.

Why it matters: 

• Higher entry costs: Property markets don't wait, and rising prices can push entry-level investments out of reach. 
• Lost compounding growth: Every year you delay is a year of missed opportunity for your investment to grow.

3. Paying too much 

Overpaying for a property is another trap, particularly for those who lack negotiation experience or fall for the shine of brand-new builds. 

Why it matters: 

• Skilled negotiators: Real estate agents negotiate daily, giving them the upper hand over inexperienced buyers. 
• The illusion of new: Brand-new properties are often inflated with emotively attractive features, developer margins, marketing fees, and build costs, leaving little room for growth.

4. Professional advice 

Some investors believe they can do it all themselves or that 'free' advice is just as good as paid, expert guidance. The reality? Free advice often comes with hidden agendas. 

Why it matters: 

• True independence costs: Fee-for-service professionals, like Qualified Property Investment Advisers and buyer's agents, act in your best interests - not the seller's. 
• Compounding returns: A well-chosen property that grows even 1% to 2% more per year can create extraordinary long-term wealth. 
• The hidden cost of 'free' advice: Sales commissions (up to 10%) are often buried in the price of new builds - so you're paying, whether you realise it or not.

This is an edited extract from How to Retire on $3,000 a week (Major Street Publishing $32.99), republished with permission.