I thought it was a good place to put the list of things that can go wrong, so people who want to start investing can learn and see it's not all rosecolored free money :
I'll give it a headstart , please let us know if you have more ( please don't post things that have already been said )– House prices can go down
– Renters can stop paying rent
– Legislation can change so you get less tax benefits
– Legislation can change so you get less rent
– Legislation can change so you can borrow less money
– You can can mentally or physically disabled
– Your house can burn down
– Interest rates can go up
– Your neighborhood can lose it's appeal
– LEPs and DEPs can be changed affecting your home
– Your house can be flooded by river or ocean floods
– Storms can cause leakage in your home
– Storms can destroy your houseThought I would add a few more.
You do not notice train line running behind the house before you purchased.
You do not notice that a New freeway is being built on your land.
Mining company decides to mine your property.
You get bad tenants that trash house.
Termites.
Bed bug infestation.
Mold infestation.
Prior owner did an illegal extension not council approved.
Gum Trees that tower over house cost money to be cut down and council refuses to let you cut them down.
Ground moves and foundation of house collapses (saw on Current Affair)
Fence needs fixing and neighbour refuses to pay for new fence ( My current headache)
House was built on previous Garbage tip . Foundations collapse.
House in Mining town and Ground opens up due to old mine hole.(saw on Current Affair)
House has poisioned ground due to previous mining.
Bikers or neighbours from hell live next door.
House in Footscray Victoria and you didn't know that a 100 trucks go past the door every day.
House in mining town and mine closes down.
Property is in small town and only bank closes down.
You want to live in your house and tenant refuses to leave house (saw on A current affair)Government taxes – Stamp Duty
– GST on new buildings
– Land Tax
– Capital Gains TaxScamp wrote:I thought it was a good place to put the list of things that can go wrong, so people who want to start investing can learn and see it's not all rosecolored free money :
I'll give it a headstart , please let us know if you have more ( please don't post things that have already been said )1. House prices can go down
-2.Renters can stop paying rent
-3 Legislation can change so you get less tax benefits
– 4Legislation can change so you get less rent
– 5Legislation can change so you can borrow less money
– 6You can can mentally or physically disabled
– 7Your house can burn down
-8 Interest rates can go up
– 9Your neighborhood can lose it's appeal
-10 LEPs and DEPs can be changed affecting your home
– 11Your house can be flooded by river or ocean floods
– 12Storms can cause leakage in your home
-13 Storms can destroy your house1. Only if you sell
2. its called landlord insurance
3. Not likely with this conservative Labour governemnt4. As above
5. As above
6. You could also get run over tommorrow and die, your point?
7. Building insurance
8. If your're smart you would have saved for this
9. Not likely to happen overnight, history has shown its more likely the opposite to happen ie- council investing in run-down suburbs increasing prices
10.11. Building insurance
12. as above
13. as above
sure there is risks with property as in any investment, but for every risk there are measures you can take to minimise loss.
And to add to seank,
1. House prices can (and have) also gone up.
2.If my tenants stop paying rent, I evict them via tribunal protocol and claim thru landlord's insurance. Get a new tenant.
3. Unlikely………rents would explode.
4.Please explainhow legislation change will affect my rent.???
5. My LVR and DSR is conservative
6. Insure life, income and disability.
7. Claim on my insurance and build a new house.
8. My rates are fixed. I do not gamble on trying to save on variable rate ups and downs. I sleep at night.
9. Gentrification and lack of land with amenity/infrastructure will not allow this to happen in solid metro areas.
10. LEP and DEP are likely to be up-zoned to optimise amenity, facilities and transport…..so value will increase
11., 12, 13. The world as we know it could cease to exist ……… so who cares. Any building, investment, business or owner occupied could be affected by storm, acts of god, etc. What's your point scamp.??Where do you live? As a tenant or owner accupier you need a place to live, so how does being negative help you in your home situation or investing?
Being cautious and sceptical is good policy at all times, not just in the current climate. However continual focus on the pain, and negativity of a "snapshot in time" without due regard for the bigger picture does not in my opinion serve any purpose, other than to scare people.
Maybe investing in shares might be more up your street, but then what a nightmare they are!!!
This list wasn't meant as a discussion. It was meant to list the things that can ( or have gone ) wrong while property investing. I must thank the first reply for doing that, he gave me an insight into a few things I hadn't thought about. Please refrain from posting replies that don't add things to the list of things going wrong.
michaelparis wrote:continual focus on the pain, and negativity of a "snapshot in time" without due regard for the bigger picture does not in my opinion serve any purpose, other than to scare people.This is not a snapshot in time, it's a list of things that go wrong in good times, as well as the current bad times.
What's wrong with warning people about the pitfalls of investing ? I think this forum is called "Help Needed!" and this is EXACTLY the form of help that new property investors need. Even experienced successful investors like me ( yes, I'm a property investor ) can still learn from this list.I'm warning people about the pitfalls. And I'm warning them that property investing is risky business in which things can turn and go terribly wrong. People need to be warned that things can take a turn , and that they will not be bailed out by anyone. If they accept these risks, and they accept the risks in this post, only then they should consider starting the investment.
What I have seen so far is a lot of smalltime no-brainers, carelessly and blindly getting into property, without knowing or acknowledging the risks involved : And luckily for them there's people like me here to WARN these suckers who are about to lose all their belongings to some real-estate snakes.
Scamp wrote:This list wasn't meant as a discussion. It was meant to list the things that can ( or have gone ) wrong while property investing. I must thank the first reply for doing that, he gave me an insight into a few things I hadn't thought about. Please refrain from posting replies that don't add things to the list of things going wrong.michaelparis wrote:continual focus on the pain, and negativity of a "snapshot in time" without due regard for the bigger picture does not in my opinion serve any purpose, other than to scare people.This is not a snapshot in time, it's a list of things that go wrong in good times, as well as the current bad times.
What's wrong with warning people about the pitfalls of investing ? I think this forum is called "Help Needed!" and this is EXACTLY the form of help that new property investors need. Even experienced successful investors like me ( yes, I'm a property investor ) can still learn from this list.I'm warning people about the pitfalls. And I'm warning them that property investing is risky business in which things can turn and go terribly wrong. People need to be warned that things can take a turn , and that they will not be bailed out by anyone. If they accept these risks, and they accept the risks in this post, only then they should consider starting the investment.
What I have seen so far is a lot of smalltime no-brainers, carelessly and blindly getting into property, without knowing or acknowledging the risks involved : And luckily for them there's people like me here to WARN these suckers who are about to lose all their belongings to some real-estate snakes.
Listing problems which can occur while investing doesn't take alot of brains, you mentioned storms…… mate I can list every natural disaster there is, what would the point be? wouldn't you agree providing the solutions to these problems is much more helpful?
Scamp,
You are just a big bundle of joy aren't you? …. Not a bad ego either.
I've been investing in property since the mid 1980's (as I imagine have quite a few others)…. I've seen a few downturns and managed to get through them without you being there to hold my hand. Your assumptions that us "suckers" are all blundering along blindly into the financial abyss is not only presumptuous on your behalf, but I would imagine highly offensive to many.
By all means contribute to this forum as it is designed for discussion /information, but at the same time please remember to treat the forumites with respect. These people have had the courage to take steps to try and create a prosperous future for themselves and families. They may make mistakes along the way but that is how we learn, …. they certainly don't need a walking ego trying to sabotage their minds with self doubt and pointing out the obvious.
You may think you have all the answers, but you'll have to trust me here, ….. you don't.
Martin
Here are some qwerky things that went wrong with my investments. Note, all are minor.
1. Dont just check good water pressure, also ensure good lighting in each room (1 x room had no lights in it – inspection in the day and so did not notice!)
2. Has TV antenna and wall plug, but does not work. Cannot test it at inspection and can be a little exy to fix for tenant.
3. Comes with Air, has a unit in the wall, but no compressor outside to run it! It was brand new and claimed only need a sparky to connect the front unit and it would all work! Very exy as property was tenanted with "air". Had to purchase whole new unit!
4. Sloppy paintwork, used to cover defects in furnishings, such as bathtubs, sinks, etc. You just think its a paint spill, until you remove it… Nasty!All are minor but slowely eat away at that little profit you thought you made!
Scamp and duckster
Thank you for your lists! I am starting out and am currently writing a business plan which includes potential risks and mitigations. You've pointed out some that I hadn't thought of yet and you've saved me some time!
there's always someone who will find your posts useful:)
Not on residential, but on commercial.. If you plan to invest the best scenario is the get a porperty with a tennant who must stay on or get a property with multiple leases. So if 1 departs you can still afford interest.
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