Are you going to invest in real estate for the first time? Then there are few common mistakes which have to be avoided to prevent a great loss! Read on the article and get to know on how to avoid it and earn more profit!
If you are first time real estate investor, then definitely it is going to be a learning process. You may make some small mistakes and cannot be able to get rich quickly until you learn and excel the process. But there is no doubt that real estate is a more profit earning business compared to other investments.
The major criteria which determines the success of real estate are,
- Patience – Real estate is a long term investment and it needs lot of patience to gain a reasonable profit in your investments
- Market research – This is really important even for experienced real estate investors. Before purchasing the property do a thorough research on real estate investment market.
- Time – Real estate business needs your time and effort more when compared to other business. If you are buying or selling the house, you have to be ready to show or inspect it anytime
Possible mistakes which can be avoided in real estate investing method
- Improper planning
Real estate without proper planning faces failure for sure. Purchasing a property without knowing its appreciation and market may result in great trouble. Such unplanned real estate investments often lead to a great loss and you may also lose your money completely.
- Underestimating repair costs
House flipping is a great way to start investing in real estate business! No doubt! But before purchasing an old or foreclosure properties make sure that the resale value is higher than the repair or renovation costs. Many new sellers often do a major renovation or repair by spending thousands of dollars. But while selling the property they didn’t get back the amount invested in repairs. This could cause a great loss and hence you need to make a proper estimation on how much would it cost for total repair, spend according to that and resell it for higher market value.
- Financing errors
A proper analysis of your real estate investment can approximately tell you the ROI (return on investment). Be ready to terminate the deal if the seller is overpricing the property.
- Selection of location
Another possible mistake one could make is buying a property in bad location. You can buy a low priced rental property in an awful location but cannot attract good tenants if they can’t able to live in that property. Whereas, purchasing the property in good location and selling it for small profit is comparatively better for first time investor.
General tips to real estate investor
You can hire a real estate investor and work in teams. With the experienced investment realtor it is easy for you to decide on which investment method would be better. Don’t get too emotional while dealing with real estate properties. You should be able to negotiate with the buyer who buys your property and also able to walk away when they ask your property for low market value prices. Make sure that when you flip houses the purchasing value should not exceed the mortgage or other expenses like repairs, renovations etc.
Calculate the available capital and choose the best financing strategy which applies for your real estate investment. Underestimating the cost and overestimation of your income both can lead to a miserable failure in real estate investment. Choose the sources of funds wisely before start investing in real estate and earn a great profit instantly!