1. Buying an investment property they would like to live in without thoroughly looking at capital growth and rental return potential. Most real estate institutes throughout Australia (i.e. REIWA in Western Australia) provide free online information on their websites about the long-term performance of individual suburbs in terms of capital growth, which is a good resource for first-time investors.
  2. Deciding to buy an investment property close to their owner-occupier home rather than looking at investment opportunities throughout Australia.
  3. Selecting a property based on the advice of friends or family rather than seeking independent information.
  4. Failing to obtain a tax depreciation schedule for the property. The tax benefits derived by a depreciation schedule can be as high as 60 per cent of the rental income and this additional cash flow can assist the investor to purchase additional properties.
  5. Not undertaking a full assessment of the true cost of buying and holding the property. For example, if the property is an apartment, there are additional cost issues compared to buying a stand-alone house, such as strata fees.
  6. Selecting the wrong home loan, i.e. principal and interest, which is typical for an owner-occupier home. Instead, first-time investors should focus on interest-only loans, which will help increase cash flow.
  7. Buying a property in a location that is not attractive to tenants, i.e. not close to amenities such as shops or transport.
  8. Purchasing a property in an area where there is an oversupply of properties meaning rents will be low and capital growth rates limited.
  9. Trying to select the tenant themselves rather than using the services of a number of reliable property management companies.
  10. Buying an investment property with the view to a quick return rather than viewing it as a long-term investment and stepping ladder to purchasing a portfolio of properties that will create long-term wealth.