Buying a property to invest can be the most profitable action of your life. But it can also become a financial and emotional nightmare. I would, therefore, like to address in this article 8 some of the worst mistakes that can be made by investing in real estate, and suggest how to avoid them.
But it can also become a financial and emotional nightmare.
It all depends on how you act. And the way you act depends on what you know about this area.
Unfortunately, many potential investors do not have a thorough knowledge. Worse, some of them are based on erroneous information.
I would, therefore, like to address in this article 8 some of the worst mistakes that can be made by investing in real estate, and suggest how to avoid them.
Error #1: Not doing enough background research
Before buying a car or television, most people compare different models, go to various stores and ask questions to make sure that the purchase they are going to make it worth the money spent. Well, the research work to do before buying a property should be even more rigorous! (see the article How to Buy Your First Report Property)
It is usually because they neglect this point that many beginners in real estate investors make bad decisions. They do not do, or insufficiently do, their research work about the property they would like to buy, legislation or real estate market conditions. As a result, they end up spending all their savings because the house is in need of major renovations or they cannot sell or rent it.
Some beginners wonder why they waste money on buying books or taking training, and think that the best thing to do is to buy the house first, and then learn on the job as you go along.
But that’s probably the worst advice you can give to a novice investor!
Finding the money to buy a property that represents a good deal is relatively easy. But it is only when you have learned enough about your business that you will be able to distinguish what is right business from what is not!
Error #2: Buying in the wrong area
You’ve probably heard the famous saying that in real estate there is only one rule :
The most straightforward rule is to look for areas where employment is growing.
When a place is economically healthy, many people come to work there, and these workers need housing.
However, when an area is in economic decline, people tend to leave it to seek work elsewhere. It’s as simple as that!
Error #3: Paying too much for it
The potential profit is immediately determined and locked in when the investor buys a property. Because of mistakes he made in analyzing the property, he paid too much for it and was later surprised when he realized that he was not making any money.
Always remember this basic rule: in real estate, you make money by buying!! Use the services of a real estate appraiser in Perth to find more!
Error No. 4: Not enough planning
In real estate investment, it is the numbers that matter. Emotions, on the other hand, must be kept away from the purchase decision.
When you buy a house to live there personally with your family, you do it by subjective criteria that correspond to your tastes. For example, you will favor (if your means allow it) a villa four facades, a garden facing south, a large kitchen, the presence of an open fire, the possibility to make a vegetable garden, etc…
This type of purchase is therefore based on your emotions: you will opt for the property for which you have “a crush.”
But it’s quite different when it comes to buying real estate as an investment! If you decide to buy a property for sale, it’s because you are looking for a good return on your investment. It’s the only thing that matters.
The right investment is, therefore, the one with the right profitability figures. And it may well be that a building has excellent potential profitability figures, but it doesn’t match your ideal home at all!
So, I repeat: to evaluate an investment, only the numbers count!