I recently sought a valuation for a property to use the equity for another purchase.

Before bringing in the valuer I did my own research on price growth and recent sales of comparable properties. I also consulted real estate professionals I trust.

I pinpointed a realistic figure for the property’s market value, keeping in mind that the market area had been flat recently.

Then I engaged a valuer. A youth showed up with a tape measure, spent a couple of minutes on the dimensions of the house, took some photos, then left.

His valuation was almost 20 per cent below my figure. The comparable sales listed in his report showed he’d done little research, overlooking recent sales in the same street.

I protested and sent the valuers my research. They responded by lifting their valuation 10 per cent.

Such things shouldn’t happen. Valuation is not an exact science but a valuer should not determine a property’s value is $500,000 and days later decide it’s $550,000.

Nor should developers engage three valuers and get three different figures, with a variance of 20 to 30 per cent. People in the industry tell me it’s common.

Valuations have become one of the core issues in the residential property industry.

Everything I’ve learnt from speaking to a range of people in the industry tells me valuers are being extremely conservative in their valuations.

It’s a serious matter because sales are being killed by low valuations. There are sellers and buyers ready to do deals but ultra low valuations are destroying the transactions.

There many frustrated people out there: developers, selling agents, buyers agents, vendors and buyers.

To put it in colloquial terms, valuers are covering their butts with ultra conservative estimations.

As with many things in real estate, the problems start with the banks. They pay valuers a miserable fee, which limits the time devoted to each valuation.

I spent several days of research before coming up with my estimate of the property described earlier. The valuer did not.

I should be grateful he at least visited the property. Some valuations are “second-gear valuations” (the valuer slows down as he drives past) or “desk valuations” (they don’t view the property at all).

Industry analyst Michael Matusik spoke about this at a recent Property Council function in Brisbane. He confirms the difference between the price paid by the buyer and the bank valuation is often high – over 20 per cent – and that the differential is spreading.

“The solution should be a relatively simple,” he says.  “Bank valuers should be paid more – they carry the risk, not the bank – and this, in theory, would allow them time to conduct the appropriate research. And secondly, rental return should determine value, not what a previous buyer paid.”

Matusik says finding comparable sales is often the biggest issue, especially for new units sold off-the-plan.

“Comparable sales should be recent – less than six months old. This is problematic when the number of sales is low (perhaps because of a limited supply of dwellings for sale) or because of economic factors.

“Sufficient analysis of alleged comparative sales must occur so that family transfers and distressed sales are not shown as market transactions.

“One developer arranged for one of its newly-completed apartments to be valued by several valuers independent of the banks.  The first valuation came in at $720,000, the second at $730,000 and the third at $595,000! Why was the third valuation so low?  Because the valuer had erroneously based the valuation on a distressed sale in a nearby project.

“Banks and their valuers are reluctant to use developer sales in competing projects as comparable sales.  This is based on the mistaken belief that a developer sale does not represent the ‘true market’.  In some locations, where there is no sales history for dwelling types such as a new subdivision in a green-field area or where sales volumes are low, this leads to valuations that don’t reflect a property’s worth.

“Valuers usually don’t use sales to interstate and overseas buyers as comparative sales, based again on a mistaken belief that non-local buyers are uneducated and pay higher prices than local buyers.”

Matuisk points out that buyers can challenge valuations if they appear too low.  I think more people should, as I did recently, to avoid having a legitimate deal scuttled by an inadequate valuation.

The rate cut has put an extra spring into the auction season, but don’t let it go to your head.

And so the cash rate fell on Melbourne Cup day. Summer is fast approaching, the great race was exciting and, after a year of interest rate stasis, the gates opened at last for the Cup and the cut.

The return of warm weather to the southern capitals always feels good and this interest rate cut, after so long without action, somehow feels liberating.

It is far less likely the Reserve Bank wants us to go out and borrow to the hilt to buy residential investment property. That’s collateral damage to the main game of end-of-year stimulus.

Still, the weekend brings a flood of open homes for inspection and I feel as if I’ve got a little extra cash rattling in my pocket today. Buyers will be flushed out of hibernation. It’s a rush of blood to the head.

There will be impulse buying this summer and many investment hangovers by winter.

For all the cautions that should be expressed about buying residential investment property in Sydney or Melbourne, if property is your thing, these are good times to do your research and prepare your finances.

What are we relying upon here? Looked at as a whole, Australia enjoys continuing low unemployment, reasonable job security, inflation sitting comfortably, low interest rates, economic growth and the banks back in the business of trying to attract investors.

In its statement on Tuesday, the RBA ”concluded that a more neutral stance of monetary policy would now be consistent with achieving sustainable growth and 2 per cent to 3 per cent inflation over time”.

So, we hit a cash rate of 4.5 per cent. On October 27, the Reserve Bank of New Zealand left its cash rate unchanged, at 2.5 per cent.

The RBA is hardly pushing the boundaries.

Isolated event or trend?

During the past 20 years, there has not been a case of a single cut in the cash rate followed by a rise, nor of a single rise followed by a cut. One-off events are not part of the modern interest rate landscape for the RBA.

Interest rate movements ride on underlying economic waves that do not react immediately to isolated blips of economic news. Jerks are avoided.

In the past two decades, the cash rate has been as low as 3 per cent and as high as 17 per cent; there have been long periods of cutting rates and sustained periods where rates climbed.

Although Australia’s economy is cruising nicely, don’t anticipate vast numbers of property buyers appearing on the scene, collectively pushing property capital gains back to high annual growth figures.

Many areas of small business are under pressure; shares, managed funds and superannuation have not been pouring money back into the hands of investors.

Let’s not forget the impact of our good friends the baby boomers hitting the last stages of planning for retirement.

These are people who grew up on the mother’s milk of easy returns from residential property investment, times when you bought a Victorian terrace and had to borrow $60,000.

Now they are restructuring and either looking to reduce their risk exposure or, alternatively, desperately chasing a last shot at wealth by investing in ventures that promise higher returns than residential property.

So, if you are keen to buy residential investment property, keep your head clear and act without passion. We are in uncertain times and capital gains, at least in the short term, cannot be assumed.

Look to the rent and what you can do to make this grow.

”Perfect” properties – ones that tick all the boxes – will attract summer madness, fuelled in part by this interest rate cut.

But, after the pent-up demand from frustrated, cash-ready investors and home hunters has gorged itself on prime targets, step out from the sidelines and coolly assess the wounded or imperfect properties that have failed at auction or are in need of astute renovation.

This is not the time for nosebleed investing.

Keep your head

• Residential property values move in cycles. A significant proportion of investors will pay too much. Buy in the best location you can afford. The money generally is in the ground, not in the kitchen laminates.
• Plan to hold the asset for at least 10 years.
• Plan to avoid lender’s mortgage insurance if possible. Consider a restructure of your loans and finances if prudent.
• Who is going to be your tenant? Buy property that is capable of delivering what tenants want (in that location and price range).
• Keep money (or credit) available for the inevitable periods of vacancy and expense.
• Determine whether undertaking a new investment will push you into paying land tax.

The cut in the Reserve’s cash rate from 4.75 to 4.50 per cent will take Westpac’s standard variable mortgage rate to 7.61 per cent and the Commonwealth Bank’s to 7.56 per cent, slicing $49 from the monthly payment on a $300,000 loan.

If the National Australia Bank also cuts by 0.25 points its standard variable rate will fall to 7.42 per cent, the lowest of the big four and the first below 7.5 per cent in a year.

The Reserve last adjusted rates on Melbourne Cup Day last year, inching them up by 0.25 points because of concern about inflation. But each of the big banks passed on more, the Commonwealth Bank pushing up its mortgage rate by almost twice the Reserve’s move, sparking outrage among customers and talk by the Treasurer of tough moves to rein in the banks.

Those moves mean that even though the Reserve’s cash rate is back where it was, the big banks’ official rates remain much higher, although discounting means new customers can expect a better deal if they shop around.

The Commonwealth Bank cut comes into effect on Friday and Westpac’s a week later.

A $300,000 mortgage holder will be $5000 a year better off than when mortgage rates peaked at 9.6 per cent before the financial crisis, and $5400 worse off than when they hit 5.1 per cent in the depths of the crisis.

Neither of the two banks has announced a cut to its less politically sensitive business and credit card rates, each saying they are “under review”.

The Reserve statement characterises the cut as a one-off, omitting the usual reference to rates remaining under review, saying rates are now “consistent with achieving sustainable growth and 2 to 3 per cent inflation”.

The bank cut because underlying inflation has moved back to the middle of its target band.

Previously alarmed by the inflation outlook, it is now forecasting inflation consistent with its target for the next two years.

The bank believes commodity prices have peaked, taking some pressure off the economy. Its monthly commodity price index released after the meeting was down 3.9 per cent.

The futures market is pricing in an 80 per cent probability of another cut next month.

The dollar slid 0.75¢ to US104.47¢ on expectations of more cuts.

“Effectively the bank has admitted it got it wrong,” said a Commonwealth Securities economist, Craig James. “In August it was set to hike rates but it has become abundantly clear inflation is under control and financial conditions have been tighter than necessary. The bank has now moved back to a more neutral stance. That suggests rates could move either way in coming months. If rates are moving anywhere in the short term, clearly it’s down, rather than up.”

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The forecasts were released after the Federal Open Market Committee today acknowledged economic growth “strengthened somewhat” in the third quarter while also citing “continuing weakness” in labor markets and “significant downside risks” to the economic outlook.

The committee left unchanged its plans to lengthen the maturity of its bond portfolio and maintain its mortgage-backed securities investments, and keep the federal funds rate in a range of zero to 0.25 per cent until mid-2013.

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Chicago Fed President Charles Evans dissented in favor of “additional policy accommodation.”

Forecasts for 2012 growth in US gross domestic product from the five Fed Board members and 12 reserve bank presidents centred around 2.5 per cent to 2.9 per cent, measured from the fourth quarter of this year to the fourth quarter of next year. For this year, the central tendency forecast for US growth was 1.6 per cent to 1.7 per cent.

At a press conference today, Fed Chairman Ben S. Bernanke said “the pace of progress is likely to be frustratingly slow,” with concerns about Europe contributing to “strains” in financial markets.

The Fed marked down the forecasts as the weak US housing market, unemployment persisting around 9 per cent and Europe’s debt crisis sap consumer and investor confidence. The Bloomberg Consumer Comfort Index for the week ended Oct. 23 fell to the lowest in a month, and 95 per cent of survey respondents had a negative opinion about the economy, the worst since April 2009.

Economy grew

Some reports in October indicate the recovery strengthened in recent months. The economy grew in the third quarter by 2.5 per cent, the fastest pace in a year, as Americans reduced savings to boost purchases and companies increased investment in equipment and software, the Commerce Department reported last week. Growth rose from a 0.4 per cent annual rate in the first quarter and 1.3 per cent in the second quarter.

FOMC participants said inflation, measured by the personal consumption expenditures price index, would rise at a 1.4 per cent to 2 per cent rate in 2012, according to the central tendency outlook, which excludes the three highest and three lowest projections. They kept their longer-run inflation goal in a range of 1.7 per cent to 2 per cent.

Fed officials in June forecast growth of 2.7 per cent to 2.9 per cent for 2011. Today’s lower central tendency outlook for this year represents the third consecutive downward revision by Fed officials to the 2011 outlook. They also cut their 2012 outlook from a previous forecast of 3.3 per cent to 3.7 per cent in June.

Shaved estimate

Fed officials also shaved their estimate for the economy’s long run potential growth rate to 2.4 per cent to 2.7 per cent versus a previous forecast of 2.5 per cent to 2.8 per cent in June.

The unemployment forecast for next year was higher than participants’ June forecast of 7.8 per cent to 8.2 per cent. For 2013, participants forecast unemployment of 7.8 per cent to 8.2 per cent, a higher range than their June central tendency outlook of 7 per cent to 7.5 per cent.

The FOMC eased policy in August and September without providing investors with new details about their economic outlook.

Before making policy decisions, Fed officials review a staff forecast that isn’t made public. Today’s forecasts show the central bank is realigning its outlook with a series of downgrades already made by private forecasters focusing on weak levels of job creation and shocks to consumer wealth and confidence from financial volatility.

In a survey published Oct. 10 by Blue Chip Economic Indicators, for example, economists expected GDP to rise 1.4 per cent this year. JPMorgan Chase & Co. economists expect the economy to grow 1.7 per cent in the fourth quarter from the same quarter a year earlier. The firm also expects 1.7 per cent growth in 2012 on a fourth-quarter to fourth-quarter basis, partly due to “significant fiscal headwind,” said Michael Feroli, chief US economist at JPMorgan Chase & Co.

For Clyne, the debt crisis in Europe is far more important to the profitability of his bank than anything that Reserve Bank governor Glenn Stevens does.

From a public relations standpoint, Clyne knows he is now on the back foot. He told BusinessDay he accepts he will cop criticism for not lowering the bank’s variable interest rate by the full 25-basis-point cut delivered by the Reserve Bank, but he does not believe this is fair.

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He also knows NAB’s marketing campaign of ”divorcing” the other banks and cosying up to customers will now be put under the spotlight.

The trouble for Clyne is that, amid all the noise about not passing on the full cut, few will pay much mind to the fact that NAB still has the lowest rate on the market.

The trouble is that while NAB still has a point about a difference on rates, it is not that different.

So much for the divorce. It looks like they are dating again.

”Unlike the others we removed exit fees on all loans … not just new loans … and in doing so we went further than was required,” he says.

Clyne is both defensive and frustrated that the average borrower does not appreciate the disconnect between the Reserve Bank cash rate and the cost of borrowing.

This tune sounds familiar. It is the same one the other banks were playing last year. ”The cash rate is not the driver of our funding costs,” Clyne says. Despite strong earnings from banks they are being punished by markets because of the effect the debt crisis in Europe is having on their cost of funding.

The average bank customer cannot be blamed for not yet understanding how bank funding costs have changed in the post global financial crisis environment.

The misunderstanding that the cost of funds is tied to the cash rate set by the Reserve Bank was created through years (until 2008) of watching banks simply match the central bank’s interest rate moves.

Having created this expectation, ”we have to dig our way out”, Clyne says. ”We have said rates are going to move around and we will have debates around funding.” There may even come a time when banks will alter their rates out of cycle in consumers’ favour. ”We are looking forward to the day when we do an off-cycle rate cut,” he says.

Thanks to changes in capital requirements under the Basel III provisions banks will eventually need to be 100 per cent term funded. Clyne reminds us the bank will need to go to expensive overseas markets to do this. Australian banks have been more than adequately funding their near term requirements for new credit from the wave of deposits being supplied by customers.

The trouble for NAB is perversely that it is growing its retail lending book at a rate of three times the market. This puts additional pressure on its funding costs.

It is the same problem Westpac and the Commonwealth Bank had a few years back, which drove them to move out of line with the Reserve Bank (amid howls of outrage from the pubic and politicians).

The bottom line for NAB is that business is business. It ran a successful campaign that it would break the local banking oligopoly and give the customer a better deal. It took the lead on reducing fees, such as mortgage exit fees, overdrawn fees and account keeping fees, and delivered the lowest interest rates in the market.

But success has come at a cost. And while it wants to set itself apart in the eyes of its customers, its shareholders don’t want to suffer a slimmer rate of return.

Clearly the NAB rationale has been that it wanted (and needed) to increase its market share, particularity in retail, and it created a marketing strategy around that.

Where some of the other banks, such as Westpac, have little need to go back into the shark infested offshore markets for funding, NAB is not able to fund its credit growth through deposits alone. Clyne is honest when he says wholesale funding costs are rising. They are particularly high now – higher than at the height of the financial crisis. How banks deal with this depends on their individual situations. Some have the luxury of staying away for a while. NAB clearly doesn’t.

So it was almost with constrained relish that Westpac chief executive Gail Kelly told the media yesterday that her bank had no reason to pass on less than the full rate cut.

ANZ made an even more pointed response. It said that funding costs had gone up, but despite this it would match the Reserve Bank cash rate cut.

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Home prices fell 0.2 per cent in September after falling a 0.4 per cent in August, according to property research group RP Data-Rismark. The median house price in the month was $450,000.

Home prices sank 0.6 per cent in Sydney and 0.3 per cent in Melbourne, seasonally adjusted. Canberra home prices dropped 0.5 per cent in September.

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“This represents a reversal of sorts given Sydney and Canberra have had the shallowest peak-to-trough falls of all the cities,” said RP Data research director, Tim Lawless.

From their December 2010 peak, monthly home prices in Sydney have only fallen 1.7 per cent, RP Data said.

That compares to Melbourne, where prices have dropped 5.2 per cent from their December 2010 peak compared to Brisbane which are down 7.7 per cent from March 2010 peak.

For the month, in Brisbane they rose 0.4 per cent, while they slipped 0.1 per cent in Perth, RP Data said.

Mr Lawless said Brisbane’s price falls appeared to be slowing, while prices may fall further in Melbourne.

“Melbourne has had a fantastic growth run and they have probably overshot the market a little bit,” said Mr Lawless, after a rapid building boom in the city. “So a correction after such a huge rate of growth shouldn’t be that much of a surprise.”

Any deeper falls in Sydney prices may be temporary, however, according to ANZ economist David Cannington.

“We think the fundamentals and an element of catch-up are going to prove Sydney house prices to outperform other capital city house prices at least in the next 12 months,” he said. “We think it won’t fall as much as we see in other capital cities.”

Home prices have been more supported in Sydney than other capital cities because construction has been in low gear and prices have not risen as rapidly as elsewhere over the past years, he said.

House prices have mostly slipped throughout 2011, as would-be buyers show more caution about home purchases than in previous years. Households have been discouraged by uncertainty about the strength of the global economy – on which the Australian economy relies for continued expansion – and questions about when and if interest rates will change.

Nationally, ANZ sees the trend for house prices as downward.

“Despite the positive reaction to the European ‘plan’ we expect ongoing financial market volatility will weigh on housing market sentiment and push house prices sideways to lower over the next 6-12 months in most capital cities,” said Mr Cannington.

Mr Lawless said prices reflect the consumer mindset to some degree.

“There has been a lot of speculation about interest rates rising prior to August.

“The September figures are really the first month there is growing acceptance of rates are either stabilising or falling.”

Currently there is an 80 per cent chance of an interest rate cut priced into the market, when the Reserve Bank meets tomorrow to decide. A Melbourne Cup day rate cut, if passed along in full by the banks, would chop about $48 off the average monthly repayment on a $300,000 loan over 25 years.

Before August, RBA rhetoric had suggested rate rises were more likely. Signs of a slowing economy and increased worries about offshore volatility beginning in August forced the central bank to entertain the idea of a rate cut to support the economy’s growth “if necessary”.

In Adelaide, home prices rose 0.5 per cent in September.

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Investor activity in the housing market remains subdued, according to the latest figures from the Australian Bureau of Statistics. Although the value of housing loans for investments rose 11.5 per cent in August compared with July, levels are still well below those of a year ago. Housing investment peaked in June 2010 with $8.3 billion in loans approved. The August 2011 figure was $6.8 billion.

So far in 2011, $49.4 billion worth of housing investment loans have been approved across Australia. This is 10.2 per cent less than the $55.1 billion approved for the same period last year. Although investor activity is down on last year, nearly $700 million in loans for new housing was approved in August, which is the highest figure in 18 months.

Increased investment in new homes might reflect investors becoming active in the new apartment market, with developers attracting buyers with finance and investment packages that take advantage of tax and stamp duty concessions for the purchase of new investment properties.

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Investor activity is also set to increase as Australians become more aware of the potential to invest their super in property through self-managed superannuation funds, particularly given the recent underperformance of the sharemarket.

Top house

The most expensive house sale reported this week was for 39 Chilton Parade, Warrawee. The seven-bedroom, five-bathroom house sold for $5.5 million at auction through Hilton Real Estate.

Top apartment

The most expensive apartment sale reported was 9A The Esplanade, Mosman. The four-bedroom, three-bathroom unit sold for $3.25 million before auction through Century 21 Resnekov Realty.

While the German parliament’s overwhelming approval of expanded powers and additional financial strength for the zone’s bailout fund was a significant step forward, global markets would have to ”muddle through” until a clearer picture of Europe’s future emerged, Deutsche Bank’s global chief financial officer, Stefan Krause, said.

Speaking exclusively to Weekend Business in Sydney the day after the parliamentary vote, Mr Krause said it was also essential that, contrary to expectations, Greece should not default on its massive debts, since that would only spread the financial contagion and put greater pressure on euro zone countries such as Spain and Italy

Greece could not be allowed to ”blow up”, even under a so-called ”orderly default”, an idea whereby financial institutions with exposure to the country’s debts would agree to accept losses under a longer-term restructuring of its finances.

But Mr Krause argued that few people really understood the likely repercussions of such a move. This was because the crisis in Europe was not just a financial one but a political and social one too, as events – such as voter discontent, austerity measures and rising unemployment – across the continent had shown.

Nonetheless, he conceded that Greece was not in a position to meet its immediate financial commitments and there was a need therefore for the European Union to support the country, no matter how difficult that was for some of its member states.

The EU needs the formal backing of all of its 17 euro-currency members to beef up the European Financial Stability Facility, a process that will take another few weeks and is dependent on a reluctant Slovakia to get over the line.

If this is approved, the fund will have €440 billion ($611 billion) at its disposal to buy government bonds and lend money to banks and countries to help avoid a repeat of the global liquidity crisis that followed the collapse of the US bank Lehman Brothers three years ago.

But Mr Krause, who is on a brief visit to Deutsche Bank’s Australian operations, believes governments, regulators and financial institutions are better prepared to handle any repeat of such a credit crunch.

Mr Krause cited time as a challenge for Europe’s leaders in trying to find a permanent solution that would restore certainty for jittery investors.

”The problem I see is that the people who are working hard to avoid the blow-up don’t have time to work on the longer-term plan,” he said.

”And, as we know, markets won’t calm down and the situation won’t get better until the long-term plan becomes clearer.”

The online bank today said it had cut its three-year fixed-rate home loan to 6.29 per cent. It also cut its four- and five-year rates to 6.59 and 6.69 per cent, respectively, it said in a statement.

ING Direct executive director of delivery Lisa Claes said the cuts were to maintain ‘‘our competitive position in what is a very active market for fixed rate loans’’.

Earlier today St George Bank and Credit Union Australia (CUA) both announced they had cut their fixed-rate loans.

St George, which is owned by Westpac Banking Corporation, said it had reduced its three-year fixed-rate home loan by 15 basis points to 6.39 per cent, and its two-year fixed-rate home loan by five basis points to 6.39 per cent.

CUA said it had cut its three-year fixed-rate home loan by five basis points to 6.34 per cent.

Earlier this week, Westpac cut the three-year fixed rate on its Premier Advantage package by 15 basis points to 6.44 per cent.

Most banks have been reducing rates on their fixed-rate loans as the expectations of a rate rise by the Reserve Bank of Australia weaken.

When buying property to generate wealth, keep your cool and plan carefully.

Most of us are taught from an early age to learn from mistakes. But it does not pay to slip up when you sink thousands of dollars into an investment property.

The stakes are too high and the potential losses too great. You can slide into bankruptcy simply by taking out the wrong investment loan or by buying into an area that is about to fall into decline.

According to the Australian Housing and Urban Research Institute, 25 per cent of investors sell their investment property within a year of buying it.

That’s a recipe for personal financial meltdown, pure and simple. So before reaching for your chequebook you need to take stock of the most common mistakes that property buyers make.

Taking a short-term view

You have to treat buying a property like any other investment. That means setting goals and thinking about time frames and strategy and what you can afford to spend. It’s best to hold on to a property for at least seven to 10 years to achieve good capital growth.

Many houses and units can double in value in that time but you will find prices won’t go up evenly from one year to the next. A buy-and-hold strategy protects you against these market vagaries and maximises profit.

If you opt to ”pick and flick” properties – holding them only for the short term – you are unlikely to become wealthy and you risk losing a lot of money.

Buying on emotion

Too many people buy an investment house or unit because they ”like it” or the property is a few streets from their home.

A home is very different from an investment. You select your home on the basis of your personal style and where you want to live. A capital gain is the icing on the cake.

But capital growth and rental income are everything when you buy investment property.

Think about the features that will increase rental return.

You may like high ceilings, for instance, but a tenant might not care. They will probably pay more rent, though, if there’s a dishwasher or an airconditioner.

Not the right finance

Successful investors never buy a property on impulse unless they have stitched up their finance, so loan pre-approvals are essential.

Also take time out to study how different loans work and how you should structure repayments. Offset accounts save money, reduce tax hassles and are better than redrawn home loans for investors.

Don’t leverage yourself to the hilt, either. Your loan is there to support your investment strategy, not to work against you by diminishing your own standard of living.

Doing it alone

Just as switched-on business owners surround themselves with talented consultants, serious property investors often hire experts.

The professionals to have on your team include your mortgage broker, accountant, solicitor and property manager. It can pay dividends, too, to hire an adviser to research and select investment-grade properties.

Advice that costs a few hundred dollars may save you thousands.

Managing cash poorly

Before buying it is crucial to think about tax, gearing, ownership structure and how much of your own money you will be contributing. Failed investors who are forced to sell before time are usually poor number crunchers who ”guesstimate” income and outgoings.

Seasoned investors, however, ensure they have a cash reserve ”buffer” in place. They are prepared for unforeseen expenses.