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Your first home, whether an investment or owner-occupier property, should be something that not only helps your family, but also puts you in a stronger financial position down the track. Unfortunately, it doesn’t always pan out that way. Here are five of the most common mistakes first-time buyers make and how to avoid them:
1. Not having a clear investment strategy
A lot of first-time buyers jump into the market based on emotion rather than a long-term strategy. They choose properties because they like the look of them or because they’re in a familiar area, rather than considering their investment potential.
How to avoid it: Before you buy, define your investment goals. Are you looking for capital growth, strong yields if you want to rent the property out, or a mix of both? A well-planned strategy will help you choose the right property in the right location.
Work with a professional who can guide you in making an informed decision that aligns with your financial goals.
2. Relying too much on government grants
Government grants, such as the First Home Owner Grant, can be a great bonus, but they shouldn’t be the sole reason you buy a property. Too often, buyers purchase a home just to get the grants, without considering the long-term potential of their investment.
How to avoid it: Treat government incentives as a bonus, not a deciding factor. Make sure the property you choose stands on its own merits. Look at the location’s investment potential, infrastructure, and future growth prospects.
If a grant happens to apply, that’s great. But it shouldn’t dictate your decision.
3. Ignoring market research
It’s easy to fall into the trap of buying in an area you know well, but that doesn’t always make it the best investment. A location that feels comfortable may not necessarily deliver the best capital growth or rental returns.
How to avoid it: Look beyond your own backyard. There are over 10,000 suburbs you could choose to invest in, so it’s unlikely the street you might live on now is the best one.
Study market trends, rental demand, upcoming infrastructure projects, and economic growth in different local government areas (LGAs). Be mindful of areas with high amounts of developable land because an oversupply of housing can dilute future capital growth.
Sometimes, the best investment opportunities are in established markets rather than emerging ones.
4. Not getting professional help
Many first-time buyers try to tackle the process alone, believing they can handle everything themselves. While doing your own research is important, failing to consult professionals can lead to costly mistakes.
How to avoid it: Build a team of experts around you. A buyer’s agent can help you find the right property, a mortgage broker can secure the best loan, and an accountant can structure your investment tax-effectively.
Making the most of the knowledge of professionals can save you time and money in the long run.
5. Underestimating the costs of holding an investment property
Many buyers focus solely on mortgage repayments, forgetting the ongoing costs associated with owning an investment property. These can quickly add up and impact cash flow if not properly accounted for.
How to avoid it: Understand the full cost of ownership before you commit. This includes council rates, water rates, insurance, property management fees (which can range from 4–11 per cent nationally), and land tax.
Creating a cash flow calculator spreadsheet will help you break down your weekly and monthly expenses to make sure you’re financially prepared.
Buying your first property is a big decision, and avoiding these common mistakes can set you up for long-term success. By having a clear strategy, doing your research, and talking to the experts first, you can make a far better decision that will hopefully change your life for the better.
Abdullah Nouh is the founder of Mecca Property Group.