MISTAKES REAL ESTATE INVESTORS SHOULD AVOID
As a prospective real estate investor or even if you have closed a few property deals successfully in the past, remember that all properties are not the same. Hence, there are costly mistakes you should avoid making
- Having no prior plan: the worse thing an investor should not do is to just want to acquire property before figuring out what to do with it. Your plan is what stands between your investment options and your end goals. It is the guide you need to know; what type of property you want to invest in, how you plan to make your profit from it, how much capital you’re capable of investing, the purpose of your investment, and the best location that suits your investment type.
- Not doing enough research: this is the first wrong step an investor should take. Having carried out your due diligence helps to save you a lot of problems. Just as enough comparison goes into purchasing a car or home appliances, the exact way you check different brands before finally going for the best that suits your taste, so also even more rigorous research should go into the buying of a property.
From asking about the property to delving into knowing about the neighborhood. Some of the most important questions your research should center on includes;
- Is it close to an industrial zone?
- Is it a flood zone or insect-infested area?
- Are there any issues with the house in terms of structure or documentation?
- Is the area peaceful?
- Why is the homeowner selling?
- Thinking you can handle it alone: because you bought one or two properties successfully doesn’t guarantee you can close all deals when it comes to real estate. You need the right team to help carry out the job with little or no stress. You need a real estate agent, a good property lawyer, an insurance representative, and a handyman. They will help investigate and recommend the best of deals. They will also inform you of any future impending danger on the property.
- Overestimating your worth: you should always make sure to go for a property with flexible payment plans and one you can pay for without getting into debts you wouldn’t be able to handle. Make sure to check your worth and be assured you can afford a property.
- Underestimating other expenses: you don’t just think of the money to purchase the house, you should consider other expenses. If it’s going to be a rental property, the repairs and replacement of basic appliances such as; water heater, extractor, gas cooker, faucets, etc. If it’s a flip property, then you’ll need to increase the value by working on the structure. It could be taking out the entire roof, doors or adding an extension. You will add all of these together with the property purchase price, see how possible it is to get your money back over rents or sales and what will be left as your ROI. Then, you can conclude if you’re in a position to purchase the property.
Ultimately, having a concrete plan, the proper team to work with, and understanding the pros and cons of every investment helps you to avoid making a hasty investment decision.