It is a truth universally acknowledged that a person in possession of a small fortune must be interested in real estate investing. Jane Austen may or may not have uttered these words but in this current day and age, it is very true. Buying a house is one of the most important milestones in a person’s life. With the boom in population and rise in prices, everyone wants to buy a property. It doesn’t matter whether you wish to rent it out or sell it at a later date. Investment in real estate offers great opportunities for high growth. However, there is a chance of committing a few mistakes when you set out in this field.
Here is a list of mistakes you should avoid when you start investing in real estate and some real estate investment tips.
1) Choosing the wrong location
Real estate is all about location, location, location. Sometimes, even being on the wrong side of the road can spell the difference between profits and losses. In the future, whether you wish to rent out the place or even sell it, remember that prospective buyers have a high regard for the right location. One such real estate investment options is to search for a property with the right location that fits within your budget and real estate goals.
2) Ignoring paperwork
Alright, paperwork sounds boring but the truth is: it is extremely important (especially in real estate). You want to ensure that all the documents are perfectly in place. There have been many instances in the past where real estate investors were cheated because they were duped with fake documents. Read the contracts thoroughly and make sure everything is in order before you buy the property. You could also use the services of a lawyer to ensure that there is nothing wrong with the paperwork.
3) Buying the first property you see
Many real estate investors are struck with the symptom of “loving the first property they see”. This can be due to the fact that the investor is a novice or he is simply lazy. A single investment in real estate can cost lakhs (or even crores) of rupees. You don’t want to make that investment decision without looking at other options. Always check out a few properties so that you have the choice to make the best financial decision in the end.
4) Waiting too long
Buying the first property is not good. But at the same time, waiting too long is not good either. When they start researching, a few investors get bogged down by the feeling that a better property or a better deal is around the corner. As a result, they wait and wait without making the investment decision. This can be harmful too. When you find a property that meets all your requirements, it is time to sign the dotted line.
5) Not saving enough for repair and maintenance
This is a common mistake committed by rookie investors. By the time they finish the deal, they exhaust all their financial resources. As a result, they don’t have enough money for maintenance or renovations. Buying a property is one thing but if you wish to put your mark and sell it in the market, you need to factor in additional expenses. Things like furnishing the property, roofing and refitting appliances can cost a big buck and you need to be prepared to finance these expenses.
Real estate offers great investment potential but it is not a get-rich-quick scheme. In order to see profits in the market, you could pay heed to the above-mentioned mistakes to avoid while investing in real estate. You may also want to put in hard work and identify the best properties that fit in your budget. Alternately, you could also seek the advice of a real estate investment advisor. Don’t let emotions drive your decision making or you may end up paying too much for a property. Remember, you always have the power to walk away from the negotiating table if the price is too much.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.