There are many benefits when it comes to investing in real estate. It is a great means of building equity for your future as well as generating passive income and cash flow. However, even though the benefits are large, there are still a number of mistakes made by real estate investors especially first-timers.
Real estate investment basically involves the selling, ownership and management of real estate for profit. So if you are thinking of investing in real estate for wealth creation, Propertydome brings to you common mistakes that real estate investors make. This would enable you to not experience the same mistakes or difficulties down the line.
Not Conducting Proper research: No matter what type of real estate investor you are, whether personal homeowner, landlord, flipper or land developer, the need to make proper research cannot be overemphasized. This is one common mistake real estate investors make.
Before you commit money to any property, ask a lot of questions, be curious. It is also important that you familiarize yourself with the environment or location so that you know your challenges ahead if any. For instance, knowing an area has bad roads or is flood-prone would make you understand that you might find it hard to get any house you invest in around there sold.
In the same vein, conducting proper research would help you identify areas with high growth potential. This would enable you to get profit when you invest in such area in years to come. Property research or analysis also helps you verify and modify input assumptions, such as gross revenue and operating expenses, to identify whether a property is a good purchase opportunity or not.
[READ MORE: 5 Remarkably Useful Property Management Tips for Landlords in Lagos]
Not mastering the art of negotiation: One of the qualities that differentiates a successful real estate investor from an unsuccessful one is the ability to negotiate. In selling generally, negotiating is needed to be able to get the best deals. Not mastering the art of negotiation is a common mistake real estate investors make especially first-timers.
When you get the price for a property and you see that you can afford it, don’t be in a hurry to agree at once. You may be able to negotiate a lower price. The same idea also applies when you are ready to sell.
Having oral agreements: In this age and time where it is hard to tell scam artists from genuine sellers, all agreements must be documented. Real estate investors should never make the mistake of having oral agreements. For a home purchase agreement to be valid, it must be in writing. The contract must also contain an offer and an acceptance.
Also, it is important to acquire all the necessary documents that show proof of ownership before you part with your money. There are many scam artists out there waiting to take advantage of unsuspecting victims. Make sure you ask questions.
Investing Emotionally: As the saying goes emotions cloud judgment, as a real estate investor investing solely based on your emotions is no way to go. Some investors come across a property and instantly fall in love with it without finding out facts about it and researching whether it’s a good investment opportunity or not. The downside of this is that an emotional investment often ends up costing the investors money which is a huge mistake real estate investors should not make.
Focusing On The Wrong Market: This is a mistake some real investors often make. Some investors choose a certain target market only because they are familiar with it not necessarily because it’s the best market for them or that it’s the most profitable.
For instance, they buy properties where they live because they know the city and the surrounding area. However, counting on familiarity when it comes to buying properties can cost you money in the long run.
