Common Mistakes First-Time Property Investors Still Make in 2025
In property investment, what you don’t know could cost you more than money!
· From buying with their heart to underestimating costs, new investors are repeating avoidable mistakes
· Good location, sound legal advice and a clear exit plan are non-negotiables
· Doing a little homework today could save you BIG in the future
Think you’ve found the perfect rental property?
Well, think again! In 2025, first-time investors are still being tripped up by age-old mistakes that could have been avoided with the right planning, due diligence and advice. From misjudging the local market to underestimating maintenance costs, buying an investment property is full of potential pitfalls – but also huge opportunities for those who do it right!
With advice from Jon Mardell, property expert and founder of Mortgage Free, we’re breaking down the most common (and costly!) errors that new investors make – and how to avoid them.
1. Letting Emotion Drive Your Decision
Property is an investment, not a passion project and one of the most common mistakes new investors make is buying with their heart instead of their head. While it’s completely normal to fall in love with a kitchen or a pretty garden, they mean nothing if the numbers don’t stack up.
As Jon Mardell warns, "Just because you can see yourself living there doesn’t mean your ideal tenant will. You’re not buying a home – you’re buying a rental opportunity."
The fix? Focus on location, tenant demand and return on investment.
2. Failing to Budget for the Real Costs
The purchase price is just the beginning and many new landlords forget to factor in the full suite of costs that come with owning a rental property. These include stamp duty, legal fees, insurance, repairs, vacancies, letting agent fees – everything including the kitchen sink!
"It’s not just the mortgage," says Mardell. "It’s the boiler breaking down, the roof needing attention, the two months of missed rent that could throw your entire financial plan out the window."
The best advice is always to treat your budget like a safety net, not a best-case scenario. Adding well-considered budget contingencies can be the difference between a profitable year and a painful loss.
3. Overestimating Rental Income
Everyone wants strong rental yields, but assuming top-dollar rent without understanding the local market is a fast track to disappointment. Just because a similar-looking flat across town rents for $2,500 a month doesn’t mean that yours will.
Always research comparable properties in the exact area and consider how your property compares in size, condition and access to transport or amenities.
A good rule of thumb when you’re starting out is to underestimate your returns. That way, anything extra will be a big bonus!
4. Ignoring the Importance of Location
A budget-friendly postcode might look like a win—until it sits vacant for months.
Location isn’t just a cliche – it’s everything in property investment. Many new investors focus on price tags instead of tenant appeal, chasing low prices in areas with poor tenant demand or low growth potential.
“You need the right postcode, not the lowest price,” says Mardell, “Think infrastructure, schools, job growth, not just bricks and mortar.”
That means before buying, you should dive into the local data. Everything from regeneration projects to crime rates to transport links can all matter a lot more than you think.
5. Skipping Independent Legal Advice
Property law is complex and relying solely on the seller’s solicitor — or worse, trying to cut corners and work it all out yourself — can lead to costly surprises later. Hidden fees, restrictive leasehold clauses, unresolved planning issues and unclear boundaries are just a few of the headaches that could turn your dream investment into a legal nightmare.
Mardell warns, “You don’t know what you don’t know. And if you don’t have the right legal team, it is easy to miss something critical.”
Always use an experienced conveyancer or solicitor who understands the buy-to-let market and will act in your best interest. They will spot red flags early, keep the transaction compliant and ensure you’re not walking into a financial or legal trap.
6. Neglecting the Exit Strategy
Most first-time buyers focus on buying, without looking further down the line. But what happens if you want to offload the property in five years? Will your strategy need to change if the market suddenly dips?
"Always have an exit plan," advises Mardell, "Think about your goals. Are you flipping for short-term gain or holding for rental income? Are you prepared for changes in tax law or interest rates?"
A good investor always knows their next move. And, more importantly, how to make money no matter what happens.
Would You Fall Into These Traps?
Even in 2025, many of the most expensive property mistakes are entirely avoidable. But with the right preparation, advice and long-term mindset, first-time investors can avoid these traps and give themselves the best chance of a tidy profit.
Have you had to learn any hard lessons?
We would love to hear some of your first-time investment stories in the comments below!
ENDS
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About Mortgage Free
Mortgage Free is one of Australia’s leading mortgage brokers, specialising in home buyers, first home buyers and investment property lending solutions. Mortgage Free provides personalised, tailored solutions for Australian property lending. With access to more than 30 lenders and over 20 years of lending experience, Mortgage Free can guide you through every step of the home loan process.
Jon Mardell is the spokesperson and owner of Mortgage Free.
