Are you a dangerous property buyer?

Momentum Wealth managing director Damian Collins has identified five key categories of 'dangerous property buyers' so investors can decide whether they're taking too many risks in the property purchase process.

Collins says investment property can be fraught with danger and provides plenty of opportunities to make mistakes.

Knowing the most dangerous types of buyer behaviour provides a sense of what to avoid, he notes in a recent note to clients.

The five most dangerous property buyers are:

5. The over-eager buyer
"This type of buyer hates to miss out," Collins says. "They either fall in love with a property or, after getting frustrated at not finding what they are after, jump in whole-heartedly and get carried away in the moment. The result is they often over-pay, which is why they are loved by auctioneers."

4. The misguided buyer
"This type of buyer buys for the wrong reason. Maybe they're looking to reduce their tax bill or they have been won over by the promise of a rent guarantee," Collins says. "The outcome is they often pay too much for a poor performing asset that fails to provide the capital growth they ultimately require."

3. The bandwagon buyer
"This type of buyer likes the comfort of large groups. They move with the herd and as a consequence tend to buy property at the peak of the cycle when growth is fuelled by speculation," he says. "They buy property because everyone else is. "The poor timing and lack of research of this buyer means they often miss the market upswing and have to wait years for growth. Sadly, they often sell-up out of frustration before the growth eventually comes."

2. The impulse buyer
"This type of buyer buys an investment property like it was a packet of gum at the service station," according to Collins. "They happen to see a property on the market in their street or while on holiday and they decide on the spot to make a purchase. There's no need for research when you have good instincts. "Sadly, the lack of research and cash-flow analysis almost always leads to a poor performing investment that costs too much to hold and misses out on hundreds of thousands of dollars over the long term in lost equity."

1. The would-be buyer
"This is the worst type of buyer, the type that simply waits and waits," Collins says. "Procrastination is a favourite pastime for this type of buyer and they find it easy to come up with reasons not to invest despite the lingering realisation that they should. They are easily spooked by cautious relatives and are unwilling to take calculated risks despite seeing clear opportunities."