You’ll find these references everywhere you read up on real estate that it is a vast industry with great potential. People ranging from established business owners who are looking to expand to young entrepreneurs that are looking to put their savings towards a house are on the span of investors. This means that not everyone has the same experience or background while investing into real estate.
While many settled and experienced real estate dealers have quite a good knowhow of the working of real estate industry which allows them to avoid trivial mistakes in the matter of real estate dealings. On the other hand we have young investors who are new to the game. Not only they lack a thorough awareness of the real estate market they also will make some common mistakes while investing.
We are writing this article to make beginners in the industry more aware of these mistakes so they can get a heads up to avoid them and not repeat these while investing:
Investment without planning:
It is one of the most cherished traits of a good real estate investor that they always have a sketched out plan for their business a business plan acts as the backbone of your investments and provides a clear pathway to where you want to take things. Business plans can lead to great success in investment by managing your finances and adding structure and organization to your work schedule.
Last thing one wants to do is buy a property on the market and then be puzzled by what to do with it. Planning is an area of great importance as it will provide you with great options for the future of a property you are investing in.
What kind of property are you looking into? What is the purpose or intent with which you are investing in property? Are you buying a property to convert it into a rental? Are you buying a plot to sale it or build upon it? Are you buying a fully furnished house to live in it or sale it? If investors of real estate are not asking themselves these questions, their investment can quickly turn into a failure.
Research is another very important part of real estate investment as it can allow you to look up exactly the kind of property you want. You might find a property of your desire or as close to your desire at a price which you can afford. You might be pleased by a certain property but diving head first into investment and ignoring all market research is nothing but foolishness.
Let’s elaborate the example of a property you find attractive further: you find a house that has the exact architecture that you desire, it is ideal in its spaciousness and grandeur, the deal is also too good to be true and you want to proceed with investing right away. Now take another perspective of the same house; the area this property is located in is flooded with crime, lacks basic amenities and development to assure smooth flow of life. It is also located in a suburb away from the main city area. A person who would conduct their research will turn down an offer due to all the reasons in their surrounding; however the one ignoring research will find themselves to regret their decision as the truth in unveiled to them after putting in their money.
So next time or even when investing for the first time; doing thorough research is a must for that house you always in DHA Islamabad wanted or when investing into an apartment for sale in Rawalpindi
Although many young enthusiastic investors think real estate is easy, it really is not the case. Many new investors are overcome by a sense of ego and pride due to the liberty they find themselves in while essentially being their own boss when it comes to investment. Arrogance can lead to disastrous results in real estate investment.
You might have heard from a coworker or a friend to get some assistance with your first few deals. You might find a deal puzzling or an investment decision difficult to make but don’t bother hiring real estate agents to guide you through the way or take support of a real estate agency. Even when some beginners hire agents to assist them; they often go against their advice and end up in a loss from the deal they are making.
It is important to realize that there are options that can assist you in increasing your chances of success while investing and you, especially as a beginner might not be able to fully comprehend the workings of real estate industry. The top level real estate investors also work with some management agency or hire real estate agents for guidance despite their years of experience. Never underestimate the importance of help and guidance in this field.
Take an example of an apartment for sale in Rawalpindi that you are settled on; however all of your peers and professionals on the field advise you against investing your money there. You should always respect the knowledge and expertise of others in the real estate field.
While some new investors will find initial success upon investing into a property; it’s the management of property that leads to failure in such investments. Management can be of two types; of a property you have bought or a rental you are overlooking as a landlord. A lone bought property can be made certain improvements to, to enhance the quality. Good investors know the importance of increasing a property’s value and invest their time and money for its management. Similarly not paying any importance to preparing a house for when it is time for sale can develop lackluster results for a beginner in the field of real estate.
Poor management of rental properties might seem easy on the landlord for the time being… but it can be quite costly towards the future of this property. Poor management can lead to dissatisfied tenants which can make them want to leave your rental ASAP. Poor management on an owner’s part can further spread a bad reputation about your property that can further lead to your rental not getting much attention. Not maintaining the rental property from time to time can depreciate its value over time which can result for a failure for the investor.
Not accounting for finances:
This is a very common mistake that leads fresh investors to go in a financial loss. Sometimes the opportunity to get your hands on a luxury or upscale property that is above your affordability can seem quite desirable. Many young investors haste in such investments and end up taking heavy loans to get ownership of such property. Not only such a big risk unnecessary for new investors; taking loans this early can be horrific if the investment fails.
Same can be the case for single time home buyers; they might get their hands on a property they always wanted but ignoring their finances can lead to disappointment. Furthermore management of a property can add up on the property costs, another aspect that shouldn’t be neglected.
Only focusing on short term gains:
People who make the mistake of solely banking on short term gains usually lack an effective business plan as well. In the real estate industry many individuals might be overwhelmed by the profits they achieved on their first few deals and think that short term investment into property is the way to go. This leads them to quickly sale off their property for quick returns on investment, whereas they can be a lot more strategic and take their time with their investments to yield better results in the long run.
Consider the case of a property that gains you a net profit in the meanwhile, however to a vigilant investor owning the same property might look at market situation and sale it off at a much more favorable time (according to their long term plan) to gain a much better profit than the former.
You might think that buying a plot, house or apartment for sale in Rawalpindi, Islamabad and Lahore might be easy to invest into and then sell as soon as possible for quick profits; however not considering long term will make you regret selling some property earlier than you should have.
Falling for scams:
As the industry grows, more scam artists find it an ideal ground for their trickery. Many fresh investors and especially first time home buyers are easy targets for fraudsters and can fall for them quite easily.
The current state of real estate market is teeming with many kinds of scams and frauds. There are many variations of title frauds being committed. Teaming up or hiring phony real estate agents can also lead to a disaster as they not only give you horrible advice on property investment; they might trick you into a larger sum of pay than they are working for. New investors can also fall for the scams of fake listings on the market. Similarly; new investors and single time buyers can also end up overpaying for a property at the hands of a scammer or dishonest seller not knowing the actual property rates on market.
Real estate investment can be quite puzzling for new investors so it is always good to educate oneself on the market conditions as well as scams to avoid the most common cracks inexperienced investors fall for. Moreover taking help in case of difficulty or dilemmas is always recommended in the real estate industry and ignoring the importance of professional opinions can be a huge mistake as well.
We hope that this article was informative for you.