Whether you’ve done it before or are a prospective first-time buyer, investing in real estate is a major financial transaction that can get quite overwhelming. When done correctly, you have many benefits coming your way such as money to go on a vacation, or a worry-free retirement. [Read: Effective Time Management Techniques for Busy Professionals]
No doubt, any investment has its own share of risks. At the same time, take care and you can ensure you don’t end up on the losing end of the stick. Here are 5 of the top mistakes to avoid so that you don’t go down that route. Complement the 5 pointers with the advice of a trusted real estate agent to avoid heavy losses.
Not Researching Enough
Inadequate research is a big pitfall to put yourself into, particularly if you’re investing in real estate for the first time.
- When looking at different properties, do investigate their history before investing. An initial title report can show you if a prospective investment carries considerable hidden expenses connected to settling certain title matters.
- Location, development plans, accessibility, maintenance of homes in the area, and market rents are just some of the other important factors you need to put your mind and heart into researching.
- Check online reviews (go by recommendations from known people if you can) and compare written quotes before settling on a title company or agent. Don’t hurriedly choose the first one that comes your way. For example, Keller Williams Miami is a top name in the real estate market in the United States.
Allowing Emotions to get in the Way
The rule of love, at first sight, may work for romance but shouldn’t be applied when making a choice of real estate. It is also common to buy a house on impulse or to just settle on something because of a discouraging process or pure exhaustion. That shouldn’t be the case.
A good real estate agent can help you overcome blind feelings for a home that can affect your sense of reasoning. It is best to concentrate on the
long-term goals. Focus on the more essential aspects such as capital growth, current rental rates, and a long-standing evaluation of your requirements.
Borrowing More than Manageable
If you see a pleasing investment in front of you, you may be tempted to borrow to your limit or even near to it. Be warned! Even at 95 percent of your borrow limit, you run the danger of zero wriggle room, should interest rates increase while rents do not.
Don’t be too confident about your income stream being steady always. Factor in possible and unexpected problems such as an unexpected long leave for health reasons. In addition, consider these home-related expenditure types – furniture purchase, small home improvement, and the like.
Foregoing the inspection process
This is highly not recommendable. Get the seller’s consent and go in and check out the house. Make sure there are no faults that are cause for apprehension. Once you’ve done the preliminary check, invest in a professional home inspection service. Among other things, this will help you save money in the long run and possibly also, negotiate a fairer price for the property you’re considering.
- Miscalculating the Expenses
Doing so will harm your purse strings. It is hard to forget mortgage payment. However, you also need to budget for a vacancy, maintenance, insurance, utility bills, property taxes, and management.
Do consider the possibility of surprising/unexpected repairs. Fixes for older homes are most of the time, more expensive than originally estimated. Ideally, you should think along the lines of a rehab contingency of no less than 20 percent.
As the saying goes, “Don’t count your chickens before they are hatched.” Be wise and cautious, and then, you need only watch as the rewards come in.
She is a blogger who loves to write in different verticals. She co-authored Supercharge Organic Traffic: A popular course focusing on Organic Traffic for Ecommerce.. Her hobbies are travelling and reading novels.