Real estate investment is perhaps one of the most lucrative forms of investment today. But it is also equally risk bound especially when one is not well versed with the trends and nuances of the real estate market. So if you are contemplating on investing in real estate, it is best to avoid costly mistakes in real estate investment especially when you invest your hard earned money into it. Knowing the most common mistakes made by real estate investors helps one steer away from making such mistakes in the future and ensures good return on investment.
Here are the top ten mistakes made by real estate investors, according to bankrate.com. Bankrate has put together the top ten mistakes after speaking to established, full-time real estate investors and other professionals involved in real estate investment such as bankers. Read on to know them and avoid them.
1. Not planning up ahead. Lack of a proper plan is the biggest mistake made by novice investors. Finding a house after forming a proper investment strategy is the right way instead of looking for a house to fit the plan. Many make the mistake of buying a house because it seems to be a good deal and then trying to see how they can fit it into their plan. Instead of buying a house and thinking one can plan in due course, investors should rather concentrate on the numbers and try to make offers on multiple properties. This will ensure a good property that not only matches their investment model but also works out well with the numbers they had planned for.
2. To believe you can make money quickly. The second major mistake that real estate investors make is to think it is very easy to get rich in real estate. This is only a myth and the reality is that investing in real estate is a long term project.
3. Doing it single-handedly. For becoming a successful real estate investor one needs to build a team of professionals who would assist the investor in his deals. This would ideally include a real estate agent, an appraiser, a home inspector, a closing attorney and a lender.
4. Making excess payment. One another reason that investors in real estate goof up in their investment is by paying too much for the properties they buy. Paying too much and locking up all the funds in the erred property deal will leave you with no money to redeem yourself.
5. Leaving out the groundwork. Not doing your homework could be a costly mistake if you were a real estate investor. Every field of business needs sufficient amount of homework to be done, and real estate investment is no exception. Learn the fundamentals and then venture into investing in properties.
6. Throwing caution to the winds. Investors have to exercise a certain degree of caution and take earnest efforts while making a deal. New investors often fail in this regard and sign a deal without doing adequate research on the property.
7. Miscalculating money flow. Investors whose strategy is to buy, hold and rent out properties need to ensure sufficient cash flow for maintenance. Property managers could be expensive and the owner has to incur more expenses such as mortgage, taxes, insurance, advertising costs etc. Investors have to allocate their budget such that all these expenses are taken care of, or end up having their asset turn into a liability.
8. Lowering the volume. A larger volume of deals or transactions helps in increasing the profits by reducing the impacts of marginal deals.
9. Getting trapped in your own deal. Having more number of options at hand for the property you buy is a wise strategy. This helps one to be prepared for fluctuations in the real estate market. Plans to rent out the house could go awry when the rental market slumps. Having alternative plans helps you cut down losses and tackle unexpected situations.
10. Making incorrect estimates. People who plan to rehab their house need to check if they will still reap the benefits at double the time that they had estimated. This ensures they do not miscalculate and lose money on the deal.
Tags: Avoid, Estate, investors, Made, Mistakes, Real
You may be reading in the real estate blogosphere and hearing from the experts out there, that now is a great time for real estate investing, due to the incredible amount of deals and foreclosures that exist across the country. Banks are giving homes away.
I do agree as I work with these deals all the time. However real estate investing can be a risky business and a very slippery slope. One thing that is indisputable, investing in Real Estate involves MATH.
Yes our favorite subject. But it is really quite easy and Here it is:
INVESTOR + REALTOR LOYALTY= SUCCESS
1. First, you must, not it would be nice if you did, but you must interview local real estate agents in the area you are thinking of investing, because they are in the trenches every day with buyers. Realtors know what buyers want, what neighborhoods are in transition, declining, revitalizing and which areas will likely bring investors the best return on their investment down the road.
2. Once you have interviewed several Realtors to see which ones are selling, not just listing the properties in your chosen area then commit to them. Let me say this again….commit to your Realtor because they will work hard to make the entire transaction smooth and bring it to its ultimate conclusion….closing.
There are many, many steps along the way from contract to closing. If you are loyal to your Realtor, they will be loyal to you and will be a considerable asset in your investment plans. As a good investor you must realize the importance of having a good real estate agent in your corner. It can mean the difference between success and failure. Your TIME is money and your Realtor saves you an incredible amount of time, from negotiating the contract, to setting up the inspection, to working with the lender, appraiser and the closing attorney, the list goes on and on.
3. If you buy to renovate and resell, guess what? The Realtors are a wealth of information when it comes to contractors who they recommend for your project. They have had the opportunity to see how these contractors work, their fees, their reliability, etc. Bad contractors can eat away at your profits quickly, so you need good ones.
4. Okay, so now you are ready to resell the property. It is here where many investors think the hard part is over. They think they will just put a FOR SALE BY OWNER (FSBO) sign in the yard and sell this thing on their own. BIG mistake in this market. Now more than ever you need a Realtor working hard to get the home sold. They have access to buyers that you do not, when a buyer does comes along, again the negotiation process starts and you do not have to deal with that buyer face to face. As an investor there are significant benefits in NOT having to deal with the buyers directly. Remember TIME is money and many investors mistakenly think, hey I can sell this home on my own and save thousands in commission, but forget to realize that they will likely hold onto that property for a longer period of time than if they had used a Realtor from the start.
Tags: investors, Realtor LoyaltyThe property prices in Kolkata have been moving steadily like before and with this it would not be wrong to say that Kolkata is indeed the city of joy and peace. To prove this it can be stated that the price of the apartments in the south and central part of Kolkata has gone up to the tune of Rs. 800 per square feet in just six months.
This stability in the market trend has been successful to catch the attention of the investors. After witnessing the commercial development in the most posh areas like Chowringhee road, Park Street and Camac Street, the city of joy has truly become the IT and ITeS centers and the Kolkata real estate market have finally sustained momentum. It has also led to the definitive growth in the upcoming industries, which has provided great opportunities to the real estate dealers and developers. Not only for the builders, but this favorable trend has also been in favor of those who want to buy residential or commercialproperty in the city.
It is due to this that we are able to see Kolkata in a totally new avatar, springing with one of the most lavished hotels, retail malls and commercial and residential complexes; the demand of which have risen to a great extent due to its cultural heritage and all round development. Not only the advancement in the city have made the commercial and residentialproperty very expensive and highly demandable but also the Government’s support through SEZs, IT Parks have contributed to the price growth.
So if you too want to secure your future financially, by investing in the real estate property of Kolkata, or want to buy a space, then it is the best time that you invest. With the developments and the perfect growth in the market, it is the best opportunity for you to get your deal done.
Tags: investors, real estate market
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