Real estate is a good investment but it is also an expensive one and you cannot afford to make mistakes that could make you lose your money. We will explore some of the mistakes and how you can avoid them so that you become a success in the real estate business.
Buying based on emotions.
Being in real estate is all about logic, for example, if you’re buying a house, and it is in an area that is not accessible or close to social amenities, no matter how beautiful you think the property is, it will not give you good returns eventually. You should buy in an area that has a high potential for growth so that you can make a profit if you decide to sell.
Not doing proper research
Do not go into real estate blind, make sure you have proper knowledge for any decisions you will make. Read your books, use the internet, and talk to industry experts so that everything you do is based on fact, because you’ve taken the time to do the research.
Not securing a downpayment.
To invest in real estate you to have a down payment of at least 20% of the value of the property you want to buy. Investment properties usually require larger down payments than residential property.
Also factor in additional expenses you may incur like renovations, repairs and maintenance costs, among others.
Not having an idea of expenses and profits.
Before buying your first investment property, calculate how much you have, what you need to borrow, how much you need to borrow to purchase and do the necessary renovations or any other processes you may need to factor in. Then estimate how much you are going to sell or rent the property see if you can get a profit out of it. Having this projection is important so that you handle your finances well.
Buying pricey property the first time around.
If you are ready to invest in real estate, it would be a good idea to start off with a property that is not very expensive. This will give you a general idea of what goes into real estate investing, and whether you can handle the business. It will give you hands-on experience in handling real estate including dealing with suppliers, lawyers among others. If you start investing by going for the high-value property you may lose money because you do not have the necessary experience. Only go into high-value investments once you have the relevant expertise.
Not paying your debts.
Clear out any loans you may have before you go for more. Applying for a mortgage facility or a loan to acquire a piece of property while you still have other debts is not a good idea because it will place a huge financial burden on you.
Before going into real estate, make sure your finances are in good condition and look for property that will give you return-on-investment. Do your research well so that you know whether or not you are making a good move.