Having financial security is the key to a happy life. With rising costs of living, it is not uncommon for people to seek income diversification. Of late, due to rising home prices and steady rental markets, real estate investing has become quite popular. However, there are certain real estate investing mistakes that should be avoided.
Real estate investing is no rocket science.
Like every business, real estate investing has its own share of boons and banes. While returns from real estate investing could be pretty large, a bust could leave you in the lurch. There are certain standard measures that every investor should take, while investing in real estate.
Below is a list of 7 real estate investing mistakes to avoid
Considering Too Many Areas
Prior to investing, do not consider too many areas at once. This will only serve to divert your attention and keep your focus swaying. Instead, do your research and go ahead with the areas that feature on the top two slots of your list. This will save you a lot of time and energy.
Not Doing a Thorough Market Analysis
It is imperative that you do a thorough analysis of the market you might be investing in. Keep a tab on the latest developments in the area. Study past patterns and monitor current trends. Take into account factors such as political stability, economic stability and market resilience. This will minimize your risks and keep you from committing one of those real estate investing mistakes.
Besides the broader market analysis, it is also important that you do an analysis of the rental market. This could be particularly helpful if you do not intend to flip the property, but rent it out. See how the place has fared in terms of rental yield and how the rental growth trajectory has been.
Not Doing Your Own Financial Assessment
Before going ahead with real estate investing, make sure that you are financially ready for such a venture. Ensure that you have enough cash to take care of your own expenses and that you are covered on all fronts. If you are obtaining finance, take advice from fellow investors and experienced realtors, before finalizing on a financier.
Jumping off a cliff is fun only when you are certain that there’s a chute strapped to your back.
Not Checking the Property
Before handing over your hard-earned money, do a thorough check of the property. Ensure that all the promised amenities and facilities are delivered in fine condition. If you are investing in an off-plan property, make sure all specifications are met. There might be a few divergences, which you should work out promptly with the developer.
Not Verifying the Owner / Developer
It is extremely important that you confirm ownership of the house before you make the purchase. If you are investing in an off-plan property, you should do a background check of the developer. Ensure that the developer is reputed and doesn’t have a blot in its past.
Prior to making any transaction, ensure that all the documents are verified.
Not Connecting with Local Investors
Ahead of investing, make it a point to connect with other investors in the vicinity. They have years of experience in the local market and know things. You could connect with them in one of the numerous investors’ conferences, which are organized from time to time.
Not Treating It Like a Business
Real estate investing is a business and as such it needs a proper plan of execution. Sit down and write a plan. Take help from others, if necessary. Set realistic goals and sketch the timeline. Keep all things organized. Have mechanisms in the correct places to deal with any undesirable eventuality.
If you are looking to invest in offshore properties, like in Dubai, make sure that you hire a professional realtor, like Aurum-Re. Without proper guidance, offshore investing may prove to be trickier.
To educate yourself further and avert real estate investing mistakes, there are enough materials to be read online. For one such source, visit Aurum-Re’s Blog Page.