If you are looking at investing in property, there is no doubt that you will be able to find countless articles which give you more information about the best practices which you should take. But there are not as many sources of information which tell you about some of the major mistakes to avoid.
And these are just as important to know, and, in many ways, even more important. So, let’s look at a few of the common pitfalls surrounding property investment so that you are able to comfortably sidestep them.
Listening to Your Heart Over Your Head
When you are buying a house to live in, there are bound to be a lot of emotions coursing through your veins. Excitement, nerves, happiness – these are just some of the things that you will be feeling. And while there is no point trying to deny your feelings, you need to look at things from a more rational and logical perspective as well.
Have you got all the information you need about the property? How many others have you looked at to give yourself a frame of reference? Do you plan on staying here in the long-term future? These are all questions which you need to ask yourself so that you are comfortable in your own mind that you are making a wise decision.
Not Doing Your Homework
If you properly want to understand the property market before making an investment, this is something which is inevitably going to take time. You can’t simply buy a place without having a decent understanding of the neighborhood in which it is situated. What if it is impossible to get to work? What if there are no decent schools nearby?
The physical house itself is not the only thing to consider when you are investing in property. It is also worth finding out some more information including local amenities, vacancy rates, historical values of the property, and planned future development. The more you know, the more likely it is that you are going to be able to take an informed decision.
Poor Cashflow Management
Far too many people only focus on the bottom line price of a property, and not all the associated costs which inevitably come along with it. If you can, it is worth seeking out some advice from someone who is experienced in real estate investing. They are going to be able to provide you with direct answers to your questions.
Just some of the costs that you have to account for include taxes, real estate fees – not to mention anything that you have to pay to get your property up to a livable standard! And when you move into the place, you will have to be the one taking care of all maintenance issues. Don’t forget to factor in the cost of living at your new place if it is likely to be significantly higher than your previous one. Budgeting is best done with a spreadsheet (or pen and paper if you are old fashioned). Get your finances in order before you go too far down the path of property ownership.
Trying To Get Rich Quick Vs Having Patience
Perhaps you are planning on investing in property for future financial gain. And while this is not a bad approach to take by itself, you shouldn’t expect to become an overnight millionaire simply because you have put your foot on the first rung of the property ladder.
Many TV property shows make it appear straightforward to buy and sell property, making thousands seemingly overnight. But it takes time to sell real estate, and there are inevitable costs involved. It takes time, experience, and often a bit of luck to enjoy success in this game. On the positive side, property has proven itself to be a commodity which continues to be in demand. Patience and persistence are qualities which you are going to need in bucket loads to continue successfully down this path.
Not Being Thorough Enough With Inspections
Since buying a property is one of the biggest financial decisions which you can make, it only follows that you should be as thorough as possible. For example, have you thought to ask why the vendor is selling in the first place? Knowing their personal motivations could go a long way towards making sure that you get the best deal.
Another point which is worth considering is whether or not you have done relevant inspections to find any structural defects or signs of infestation. You at least need to make sure that you have asked the right questions which are going to give you the peace of mind that you are making a wise investment decision. It is worth doing more than one inspection at different times of the day so that you can get a better idea of what the place is like during the day and at night.
Not Striking the Right Balance Between Recklessness and Caution
People seem to be in two extreme camps when they come to investing in property. The first is one of acting too impulsively. The second is not having the nerve to act at all! Both investor types could end up suffering in the long-run. Those who are too reckless could find themselves in big financial difficulty after an investment gone wrong. Those who are too cautious may never actually end up investing in property – and also don’t even give themselves the opportunity to learn from their mistakes! Ultimately, your best course of action is going to be to find some sort of happy middle point between the two extremes.
Now that you know about some of the most common property investment mistakes out there, you also put yourself in a decent position to ensure that you sidestep them effectively. By doing this, you are helping to put yourself on the path to investment success.
Check out these great blogs for more tips and ideas for getting your life/work/money balance under control…
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