5 Critical Mistakes to Avoid in Real Estate Investment Properties |
Posted: July 28, 2016 |
Once the market starts to rise back up, the idea of investing in estate properties seems quite tempting, either as a part-time job or a career. However, each investment approach has a right way and a wrong way to be implemented with its own consequences. Let’s examine some of the grave mistakes real estate investors tend to make while roaming the market to purchase some property. 1.Careless planning The lack of a solid plan before plunging into the market is one of the major mistakes am individual can make. Investors would go all blank into the market, purchase a house of their choice, and then try to decide what to do with it. However, the case should be worked backwards. Draft a plan first or pick an investment model and then find a house that fits best with your plan. 2.Thoughts about getting rich overnight A real estate investment may provide a chance to earn huge, but another misconception that drives people in this field is they believe they will start rolling in money within a very short time. Keep in mind, the work required in understanding real estate market should never be taken for granted. You have to be smart, patient, be willing to work long hours, and have a keen eye for risk assessment on your investments. 3.Working alone Playing as a part of worthy professionals is the key to success. At minimum, you need to establish a nice working relationship with at least one more real estate agent, a home inspector, an appraiser, a lender, and a closing attorney, both for your own deals and to assist prospective buyers. For instance, in a remodeling or maintenance project, you need a team of plumber, electrician, painter, roofer, lawn caretaker, cleaning service, heating or air-conditioning equipment installers or HVAC, contractor, and some general handymen. As an investor, you can’t raise an empire if all of your time is consumed in fixing leaky taps or installing fans on the ceiling. 4.Paying too much One big reason some investors are never able to make nice money is: they pay too much in acquiring properties. Due to inappropriate or incomplete planning and market analysis, investors tend to pay for the property above its worth and then fail to make a considerable amount of net profit. 5.Inadequate homework An example can be quoted as: a surgeon is not qualified to make a transplant or surgery without years of education and vigorous practice. Same goes with real estate investment property cases, where investors need to be educated enough in understanding the market dynamics and investment limitations. Aware yourself as much as you can before putting your life-savings or financial security on the line. You can start with reading real estate articles, books from experienced professionals, and find a local chapter in National Real Estate Investor Association (REIA). Speakers from monthly meetings cover everything from interviewing tenants to the foreclosure process. However, if you are unable to find a local chapter, search for a potential and experienced investor in the area of your investment. Offer him some pay for an appointment of hour or two, and try to collect as much information as you can regarding your investment.
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