Mistakes have gotten the best of many great businessmen. However, few are as disastrous as real estate investment mistakes. The stakes are high and the money is huge. Of course, the payoffs are rich and rewarding when you get it right. Property is heavily reliant on surrounding factors. Prices fluctuate due to location, structure and market forces. As such, there is no guaranteed investment. But, for the right investors, there is a fortune to be found.
Unfortunately, many have found out the hard way. We’ve put together this quick guide to help you avoid the same mistakes. In business there is no better learning experience than to look to the mistakes of others. Don’t fall into the trap that many real estate investors have done. A little due diligence and research will help you avoid the major problems. Let’s take a closer look.
Buying without a plan
Jumping into any business transaction without a full plan is a dangerous game. In the world of property this is even more important. In the past, many have seen a bargain and snapped it up without thought to the future. This is where research is paramount. Use a title search NSW to look at the history of properties in the area. Investigate the location and make sure there’s a future. Buying property is all about increasing value. Without a solid plan in place, this is very difficult to do.
Going it alone
There are vast amounts of skill required in flipping property. To take it all on by yourself is the biggest mistake possible. Speak to investors who have been there before. Get their take on a particular investment. Chat to people in the location and area you’re looking at. If you have your eye on the property, take a friendly tradesman with you to view the house. Take their advice on how much it would cost to make the changes you intend to make. Seek professional legal advice on the cost and length of the proceedings. Taking all of this on yourself will see you run into countless problems.
Paying too much
It goes without saying that property investment is all about profit margins. They are rarely huge. It’s all about making small profits on every property you buy and sell. You have to find a bargain, increase its value and sell it on at the right time. Paying too much is the death of many investments. Start with the lowest possible offer and work upwards. Have a limit where you know that it is no longer profitable and stick to it. Buying cheap is the real skill in property investment.
Underestimating running costs
Once you’ve bought the property, the costs don’t end there. Even with reliable rental income, the hidden costs mount up. Repairs and maintenance can creep up at any time. Then of course there are legal fees, admin charges and taxes to consider. Get a sensible prediction of these and then add another third just to be safe. Work within these budgets at every opportunity.