You and I know that nowadays, there’s a huge chunk of profits in the real estate business. And because of the jaw-dropping gains within its nets, many people are jumping in. But, It’s unfortunate that most people don’t know jack on real estate investment, thus they are on the verge of blindly investing their hard-earned money. If you’re on this ship, there are terrible mistakes you must avoid when you’re about to invest. I’ll emphasize 5 of them.
1. Not Researching Enough:
You must have heard of property dispute cases that are in court for years waiting for adjudication, or a particular property having fake documents; A thorough research about the veracity of the property can save you from these troubles. Having a property can be delightful, but buying the property demands you to do your due diligence to ascertain the authenticity of the property. It means you ought to ask questions. Visit the community where the asset is located and make ample inquiries.
These can open your eyes to the genuineness of the property. Apart from the actuality of the property, the location of the property should also be studied. Some areas are swampy, while others are fragile, prone to collapse, or vulnerable to erosion. You wouldn’t want to build your house on fragile land that may collapse in the future. Quick and thorough research would save you from this heartbreak.
2. Ignoring The Needs Of The Tenants:
If you intend on owning a rental property, there’re a lot of things you must put into your bag of consideration. For example, If you intend to purchase a property for rentals, you need to keep in mind who your renters are likely to be, according to Investopedia.
The needs of your tenants should be your priority. If your target clients are business people, and need a spacious outlet suitable for their business operation, and are always willing to pay huge sums for rentals, it’ll be a wise business idea to design your building to suit the needs of the market – your tenants. If your renters are family people, you should know that they’ll definitely opt for a crime-free zone. If you take cognizance of your renters’ needs before investing, you can never be out of rentals since your property offers them the desired need.
3. Inaccurate Budgeting:
Every investment has a price. Budgeting your investment is simply knowing how much money you intend to cast in to acquire any real estate property your eyes spot. Prices differ with location and units of properties. Having a plan of the amount of money you want to invest will give you clarity on where to get exactly the type of property you intend to buy. It saves you from the stress of checking all the market catalogs. It helps you to segment your capital, and strategies how to make judicious spending within your financial limits. If you’re intending to invest, first, sit down and draft a budget, so you don’t end up borrowing or jumping into an unplanned mortgage, without a realistic payback plan.
4. Getting emotional With Your Investing:
Business is a real game. Investment is a serious transaction. It demands you make use of your head, not your packs of emotion. Getting emotionally attached happens when you spot a property located in an area you so much admire, or when you over-assume, thinking the property will appreciate fast, or when you’re under duress to own a property – at all cost. I think you need to control your emotions lest you may get the wrong results. It’s not easy but you need to gag it up. Emotion stalls your business reasoning, entertains unnecessary fear, paralyzes your negotiation prowess, and blinds you from asking key questions.
The worst of it is you may end up overpaying for a property more than its actual value. A property’s actual worth can be N10 Million, but due to over-excitement or fear of missing out, you may end up purchasing it at a whooping N50 Million. Such overspending can throw one into depression. You need to take a breath when you’ve sensed your emotion is all over the real estate property you intend to purchase, especially when you no longer think clearly, and reason like a business person. It’s when you tend to make the worst investment mistake ever. Put your emotions on guard when investing.
5. Trusting Blindly:
It’s easy to just take what’s in the marketing flier as fact without verifying if some of it is fiction, advised Terry Painter, Forbes real estate expert. Investment is a calculated risk, and you have to keep your trust in check. This doesn’t mean you wouldn’t have a few slacks of trust in your real estate agent helping you out, or doubt all they tell you. But, accepting all information they serve you hook, line, and sinker without personal verifications may be risky. You have to ask pivotal questions to confirm. It’s a wise decision for you to do your due research to verify whatever they say. You may want to pay a visit to the location and inspect by yourself the property you intend to buy. Some real estate investment agents could be unreliable, and trusting them totally could set your hard-earned capital ablaze. As you intend to invest in real estate, it’s advisable you go with your head to evade any trace of being swindled. It can be heartbreaking.
Real estate investing is like having a gemstone, with potentially ever-rising worth, and continuous doubling return of investment (ROI). But care must be taken so you don’t burn your capital owing to sheer mistakes you could’ve avoided if you’d have paid attention today, or if you’ve hired a reliable real estate agent.