Property investors who give up too early and sell off when the market is low often regret that they didn’t hang in for the long-term, according to mortgage broker Louise Lucas, the founder of The Property Education Company.

Lucas, guest presenter on a webinar hosted by hotspotting.com.au, says some investors are too quick to label their slow-growing assets as “dog properties” and coften end up with seller’s remorse.

“I’ve had conversations with a lot of people, in recent times, who’ve owned property in areas that haven’t performed well over the past five or six years,” she says.

“They’ve kind of run out of patience and think, ‘should I get rid of it, if it’s not performing?’.

“In most locations there will come a time when that location starts to perform better. A case in point is Logan City in the southern suburbs of the Brisbane metropolitan area.

“Maybe five or six years ago a lot of investors bought in that location because those suburbs were very affordable.”

Lucas says that, while those investors had achieved good rental yields, their properties hadn’t shown much capital growth.

“But now that market is pumping so strongly because Brisbane’s time to shine has arrived. Suddenly the owners of those properties have a whole different viewpoint about that location. Those properties are not so doggy anymore.”

She received similar reactions from clients who had bought in Ballarat, were waiting for years to see some capital growth – but eventually gave up and sold.

In the past two years prices have soared in Ballarat but those investors who pulled out early missed out on the big price increases.

“It’s a shame, but people often give up on property too early,” Lucas says.

She says property investment is a long-term proposition and investors shouldn’t expect any location to perform strongly all of the time.

Often the reason investors sell too soon has little to do with the property and more to do with the family finances.

Lucas says living expenses go up, children become more expensive in their teen years and investors tend to blame the investment property, particularly if they’ve had to replace a few big-ticket items recently.

“They tend to want to sell it straightaway instead of considering whether their problem is more of a lifestyle thing? Where is our money going? People need to look at where they’re spending their money.”

Hotspotting founder Terry Ryder says investors who buy the right property in the right area shouldn’t have to worry about selling off early.

It’s important to do thorough research before buying to ensure the location is underpinned by a strong and diverse economy, with employment opportunities, which will lead to demand from renters.

“One-horse-town locations where it’s all about mining are very, very risky,” he says. “Coastal villages where the economy is based solely on tourism are also high risk and unlikely to produce sustainable growth.”

Ryder says investors looking to grow a portfolio should ensure the early properties they buy have a sufficient rental yield to cover all the cost, so that the property pays its own way.

“Not having to dip into your own income to support that property is important,” he says.

“You need something that is positive cashflow or at least cashflow neutral because it affects your ability to go back to the bank and get a loan for the next property.”

Lucas says potential investors should be looking at their finances now to get them in order before they seek to borrow to buy real estate.

She says banks are scour through your bank statements and question all expenditure.

“You want to have all your ducks in a row with your finances and be prepared for that loan application,” she says.

“My challenge to you is I want you to review your past three months of spending because the banks are trolling through them. I’m telling you, there is no letup in this.

“If you are spending a hundred bucks on Tatts lotto every week, stop. These are the things that lenders don’t want to see. They don’t want to see any sports betting or online gambling. They don’t want to see any Afterpay.

“That’s a liability against you. So be wary of those sorts of things.”

Lucas says investors may be nervous about buying in the current hot market, but she says with interest rates so low it’s a good time – but don’t use that as your criteria for buying.

She warns, “Just because it’s a cheap property, it doesn’t mean it’s a good property. Don’t buy another dog.”

A recommended reference from Louise is the ATO Rental Mortgage Interest Expenses Guide