Real estate is a popular investment option probably because of the safety and high returns involved. However, it’s often seen that many investors make blunders when investing, mistakes that can have a detrimental impact in the future.
Here are property buying and holding mistakes you should avoid if you want to get the most out of your investment:
Inexperience in the industry
Like with any other investment, it’s essential to hope for the best while also preparing for the worst. Especially when you’re venturing into real estate for the first time, you’re bound to make some mistakes as part of your learning curve. It’s easier and far cheaper to consider financial instruments like small savings, mutual funds, or equity if you’re well-informed in this industry.
However, if you feel real estate is your thing, you should ask yourself these questions to avoid some common mistakes property investors make:
- If things don’t go as expected, can you afford to lose the money you put into this investment?
- How much time do you want to spend holding the investment?
- Are you in total capacity to invest in real estate?
- Do you prefer a cash offer or mortgage, and how does your choice benefit you?
- Can you afford emergency repairs, residential redevelopment or any ongoing maintenance?
- What type of property solution are you willing to invest in?
- How much insurance will you need?
- Is the property in a good area?
Not Taking Into Account The Full Cost Of The Investment
Many buyers make the mistake of not weighing the full cost of the real estate investment. For instance, you might be told that property costs $86,000 only to find additional charges of property ownership such as brokerage, stamp duty, GST, registration, furnishing, costs of borrowing, and more. This can pull the total cost of the property at the end of the day by up to 40%, so it’s good to be vigilant.
Just because you have savings to invest in doesn’t mean that you should be in a hurry to invest in any property that appeals to your eyes. Check at least 10 properties before your search can begin to be comprehensive. You can fall prey to impulse buying if you have insufficient resistance to pitches or allow yourself to be wooed by freebies, which in most cases do not have anything to do with the property value. Unethical brokers looking to make a commission can rigorously persuade buyers to the point of misleading them to a quick closing.
Making mistakes is human nature; we can’t entirely wipe out mistakes, but we can do our due diligence to minimize them and prevent running out of business. Learning as much as you can beforehand help ensure that your real estate venture doesn’t become the biggest mistake of your life.