Article - property investing
The 7 Most Common Property Investment Mistakes and How to Avoid Them!
By Ade Shokoya
Thanks for releasing me from the confines of this page. You see, unless I am being read by someone like you who
understands me, I am no more than a collection of shapes (called letters) that make no sense on their own. But once
read in my entirety, I have the power to impart knowledge and experience on you.
And just like the 'Genie' rewarded ' Aladdin' for releasing him from the confines of the lamp, for every
sentence that you release from this page, I am going to reward you with a piece of priceless information that is
sure to help you achieve your investment goals.
Before I continue, it would be safe to assume that you are someone who is very serious about your financial
Thought so - I recognised that quality in you the moment you read to this point. In my time I have come across 3
main types of reader:
i. Those that just read the main title and subtitles for each section and then think they know what the contents
they have not read are.
These guys always tend to come back to me at a later date - usually after they have made all 10 of the most
common property investing mistakes and lost themselves a fair bit of money in the process.
ii. Those that read me a bit at a time and because of this, I never get a chance to share with them all the
treasures that lie within me.
These guys tend to make about 5 of the 10 most common property investing mistakes and therefore, are always one
step away from financial disaster.
iii. And finally, those who take the short time required to read me in my entirety. These are the smart ones who
receive the knowledge I posses and use it to create treasures and the type of life that most people only ever dream
These are the guys who retire early, have fun and exciting lives, have great relationships with your family
& friends, be loved & admired by everyone you meet!! This is the future I foresee for you!!
Ok - as much as I sincerely enjoy your attention, I know that 'time is money'. And it would be selfish of me to
keep you here longer than I need to.
So it's time I shared with you 'The 7 Most Common Property Investment Mistakes' and showed you 'How To Avoid
Mistake #1 - Failing to Create An Investment Plan
Surprisingly, there are many property investors out there investing with no plan. Those guys fail to recognise
the importance of having goals to work towards - and some even go as far as dismissing this concept outright.
Take it from me - investing without a plan is a sure route to financial disaster. I am confident you have heard
'If you fail to plan, you plan to fail!'
On the other hand, setting clear goals is the first step towards becoming a successful property investor. You
see, successful investors have the following 3 things in common;
i. They set their own specific goals
ii. They develop a plan for achieving those goals
iii. They remain focused and take action on implementing their plan
With clearly defined goals you can easily devise a plan to realise them. But before setting goals, it is
important to have an end result in mind - a dream to work towards.
This dream must be your dream and not someone else's because when it belongs to you, it will keep you focused
and motivated at all times. Especially at times when things may not appear to be going to plan.
However, in order to turn your dreams into reality, action is required. And a plan will enable you to take
consistent action towards achieving your goal.
So how do you avoid this common mistake?
Easy - just set up a plan using the following simple steps:
a. Set your property goals & write them down
b. Set a time-frame for your goals
c. Identify the things you need to do to achieve your goals and put these into an easy to follow step-by-step
d. Take immediate action & remember to review your plan on a regular basis to make sure you are on track
So now you know how to avoid making No. 1 of the 7 most common property investment mistakes, let's move straight
on to No. 2!
Mistake #2 - Taking Investment Advice From Friends & Family
Please believe me when I sincerely state that my intention is not - in any shape or form - insult your family
What I am simply trying to remind you is of what you know already - and that is; although you may have a lot in
common with friends & family, what works for one person may not be right for another. Especially when it comes
to financial decisions and investment planning.
Where I'm from, we have a saying that sums up this wisdom and it goes:
'One persons meat is another persons poison!'
I mean think about it - do you and your friends & family;
• Like exactly the same colour, football team, food, film, book, career, choice of partner, etc?
So although our friends and family may have our best intentions at heart - we hope - we know that the advice
they give us is not always the best for achieving our personal goals and realising our dreams.
So how do you avoid this common mistake?
i. Remain fully aware of your personal and financial position and how it relates to the advice giver. You might
want to think twice about taking advice from someone who has a history of making bad financial decisions. Also,
never take investment advice from someone who has never invested in property.
ii. Be aware of the advice givers area of expertise and see how that relates to the advice they are giving. For
example, a friend may be great at giving you relationship advice - but that does not automatically qualify them as
a property investment expert.
iii.Only ever take advice from people who have already achieved the goals that you are aiming for, as these are
the people with the experience to help you navigate the inevitable obstacles you will face.
iv. Make sure that you have current knowledge of the property market at all times. That will help you identify
whether the advice you are being given is relevant to today's market.
v. Refer back to your investment plan that you created to avoid mistake No. 1 - this will help you establish
whether the advice you have been will take you closer too or further away from your goals.
vi. Find yourself an experienced property investor to act as your guide and mentor. Ok - now you know how to
avoid mistake No. 2 - let's move on to mistake No. 3!
Mistake #3 - Not Buying Property Significantly Below Market Value
This mistake is very common among other investors because although they see why it would be 'nice' to have, they
rarely see why it is 'important' to have.
Getting a property at £5,000 pounds below the original asking price is 'nice to have'. But it is important to
secure a large enough discount that will cover all your major purchase costs (e.g. deposit and stamp duty). This
approach will greatly lower the amount of personal capital you need to invest in any one opportunity.
Another important reason to always buy property significantly below market value is because: Profit is made at
the time of buying, and realised at the point of selling!
You still with me? Good. Because I know that the last statement may not be an easy one to digest. When I was
first exposed to this concept in Robert Kiyosakis' bestselling book 'Rich Dad, Poor Dad', I was 'more than
confused'. So if you are confused at this stage, let me congratulate you because 'confusion' is a sign from your
brain that you're about to expand your cognitive awareness and learn something new!!
Let me now use the following example to help you through your confusion:
Let's say a property is worth £100,000 and you buy it for £100,000. You would have £0.00 equity/profit in the
I see a similar property for £100,000 but buy it for £80,000. I would have £20,000 instant equity/profit in the
property from day one.
Let's assume a few years have gone by, the market has fallen and both our properties are now only worth £90,000.
When you sell, you are down £10,000. When I sell I am still up £10,000, because I bought with a £20,000 profit.
So you see: Profit is made at the time of buying, and realised at the point of selling! You may be wondering why
I have chosen to use an example where the property drops in value. The reason for this is that you need to be fully
aware that the housing market can go up as well as down.
And to be successful in property you have to make sure that you have sufficient downside protection so that you
never lose money - even when the market is on a downward trend. Typically, buying property at least 10% below
market value will give you a sufficient 'buffer' to protect your investment in the unlikely case the market drops
in value. So, from here on, you might want to make it one of your investment rules to never invest in property
unless you are getting at least 10% discount of its real - not speculative or inflated - market value.
So how do you avoid this common mistake?
i. First - adopt the 10% BMV rule. ii. Next - sharpen up your negotiating skills. A good place to start is by
reading Donald Trumps' bestseller 'The Art of The Deal'. iii. Finally - find the ideal property and close the
Pretty straight forward, but potentially time consuming, right?
We're now done with mistake No. 3 - so, without further ado, let's take a look at No. 4 of the most common
Mistake #4 - Joining The Wrong Property Club/Syndicate
In the previous section I presented you with a tried-and- tested option for acquiring your 25% below market
value properties through a trusted & established property network.
And to be totally honest, you are not just limited to this option because if you go to Google now (or any other
search engine for that matter) and type in 'discounted properties', you are sure to come across a long list of
'property clubs/syndicates' that may be able to offer you similar opportunities.
However, do be aware that not all such companies work to the same high standards you deserve - in fact, an
alarming number of property clubs/syndicates are notorious for inflating prices by up to 25% so that they can offer
fake discounts to unknowing investors like you!!
In addition, some of these clubs/syndicates fabricate the rental information so that they can pass-off bad
investment opportunities as ones that stack-up.
I cannot begin to tell you the number of investors who I have come across that have had their whole hand - not
just their fingers - burnt from such unscrupulous practices. And the last thing you - or I - want is for your to
share that experience with them.
That said, it is important for you to be aware that not all property networks are dishonest. In fact there a few
that conduct themselves with Integrity, Due Diligence & Transparency in all they do - and all you have to do is
sift through the muck to find them.
Here are some simple measures you might want to take to help you easily indentify the 'good' and avoid the
i. Find out what the club/syndicate/networks mission objective is. This may help you establish whether you share
the same core values.
ii. Check with Company House to see if the club/syndicate/network is registered. You may find that a registered
company is more likely to act in a honest & professional manner.
iii. Speak with other property investors to find out what the property club/syndicate/networks general
reputation is. Also, get the club to provide you with testimonies from past clients.
iv. Make sure to conduct your own due diligence into any information the club provides you with. Ask them for
the source and full disclosure so you can verify its accuracy for yourself.
If followed correctly, these measures will go a long way in protecting you from falling afoul of unscrupulous
property clubs/syndicates and help you identify 'the good guys' that you should be associated with.
Mistake #5 - Not Conducting Sufficient Due Diligence
Everyone knows that it is easy to lose money, right? Which begs the question:
'Why do so many investors insist on investing without first carrying out sufficient due diligence?'
Do you know the answer - because I don't!!
Let me be totally frank with you here; investing without conducting due diligence is not investing - its
gambling. And we are not gamblers, we are investors. Many so-called 'investors' have made this very costly mistake
and lost everything they own as a result - including the shirt off their back and the ones on the washing
It is very important that you are aware the outcome of any due diligence process is only as good as the qualify
of the information it is based on.
If you are reading this right now, it is safe to assume you are alive and living in what is being referred to as
the 'Information Age' - an age where timely, accurate information is a highly prized & sought after
The thing about information is that it is always changing, ever evolving and very far from being static.
Therefore, to be confident in all your investment decisions you need to have instant access to relevant,
up-to-date, accurate and honest information obtained from reliable sources.
As with most things, information gathering and analysis is a time consuming process. It also requires a certain
level of expertise to be able to sift through all available information to find that which is relevant to your
requirements. And in an age where we are constantly being bombarded by information from all angles, this activity
can become overwhelming.
Because of this and the fact that we all have our everyday responsibilities to take care of (family, jobs,
social, etc) some investors choose not to conduct necessary due diligence and make investment decisions based on
incomplete, old and even wrong information. This is a sure route to eventual financial disaster.
So, if you want to learn from the experiences of others and avoid making this mistake, pay attention to the
i. Always investigate every opportunity before investing. You should at least spend as much time researching a
prospective investment opportunity as the amount of time it takes to earn the capital you intend to invest.
ii. Demand honest, accurate and transparent information on every investment.
iii. Where possible, always ask for full and complete disclosure of every detail of the investment.
iv. Verify for yourself that the information provided is accurate. v. Make sure that you are always getting
timely, accurate information from an, honest, reputable and reliable source. This will greatly reduce the amount of
time, money and energy you will personally need to spend conducting accurate due diligence.
Disregard these rules and you are in for some very costly lessons.
Follow this advice and you will eventually become a very successful investor!
Mistake #6 - Making Emotionally Based Investment Decisions
As you already know, investing has nothing to do with emotions and everything to do with financial returns.
For example - it does not matter if you have a spa in the bedroom at home and the investment property does not,
or the window coverings are not what you have at home. You are not going to live in it - it is an investment and
you have to look at it from that point of view.
Remember: its all about your return on investment - let the figures and supportive information do the talking
and not your personal preferences.
The flip side of this is that some investors become emotionally attached to a particular investment property
once they have acquired it - and because of this are reluctant to offload it when it stops being an asset and
becomes more of a liability.
Newsflash - a property is an inanimate object or thing. And I am sorry to be the bearer of bad news but
regardless of how much love you have for it, it will never, ever return that love back to you. Or anyone else for
that matter!! So do not try and have a relationship with it - because that relationship is doomed for certain
failure - in fact, it's a non-starter.
You should only invest in property for one reason - to make money - and not for any other purpose. And as soon
as that investment starts losing you more money than you are comfortable with losing - and/or is no longer taking
you towards the achievement of the goal you set yourself in your original plan - it's time for you to 'get out' and
To avoid this common mistake, all you need to do is:
i. Do your due diligence ii. Assess all the relevant information available to you iii. Refer back to your
investment plan iv. Never lose sight of the reason you are investing. And that is to make money - preferably
Right - you are now one step away from being well ahead of the pack!! So without further ado, let's move on to
the last - but not least - of the 7 most common property investment mistakes!!
Mistake #7 - Investing Without The Guidance Of A Trusted Mentor
What do all the following people have in common?
• Bill Gates
• Warren Buffett
• Michael Dell
• Donald Trump
• Oprah Winfrey
• David Beckham
• Richard Branson
• Tiger Woods
If you said that they are all mega-rich, you are right! And if you said that they are all very successful at
what they do, you are also right!!
But are you also aware that one of the reasons why they are so rich and successful is because they all have
You see, they fully understand and live by one of the major secrets to success - which is seeking the personal
guidance of those who are experts in your field of interest to assist you in getting to the next level.
A mentor is 'someone whose hindsight can become your foresight'
They are accessible to you in many forms, including - and not limited to - in person, through books, via emails,
phone calls, etc.
Mentors use their experience and knowledge to guide and motivate you towards the goals you set ourselves.
They encourage you to step outside your comfort zones and move to the next level of success. They support you on
every step you take on your journey to the top - and once you get there, they will help you to stay there!!
Because you want to be successful, here is what you need to do to avoid this mistake: Find yourself a trusted
mentor with the knowledge and experience to guide you to where you want to get to!
To do this you need to start by keeping your eyes and ears open to identify the best people from whom you can
Seek out a successful professional whom you share common values with and can relate to. Look for someone who
conducts their business relationships with Integrity (at all times), Due Diligence (at all stages) and Transparency
(at all levels).
Find a mentor that is consistent, honest and trustworthy, who has a proven track record for delivering results
and a reputation for always providing value.
Follow this advice and one day, you too will have your name listed above with the mega rich and very
So there you have it - you now know the 7 most common property investment mistakes and how to avoid them.
But be aware - all that has been covered here are the 7 most common property investment mistakes. It would not
be possible to cover all property investment mistakes here - especially since new mistakes are being made every day
by some investors somewhere in the world!! And some of these other mistakes are even more crippling than the ones
we have covered here!
That said, what we have covered here is enough to see you safely on your way to success - but only if you take
instant action on the knowledge and wisdom that I have shared with you in this ebook.
Because, as you already know:
'Knowledge is power - only when combined with action!'
So start today, right now and take the necessary actions required to avoid the 7 most common property investment