Tuesday, January 3, 2017
Mind the Gap: Real Estate Pitfalls and How to Avoid Them
It seems like everyone who’s interested in safe long-term investments wants to jump on the property ladder. They either want to buy and sell homes, renovate old properties to sell or invest in rental homes. If you’re one of these people, then here’s the first tip: it’s not easy. Don’t come into the property market and expect to flip your life savings into even more money. In fact, most people come into the industry and leave with permanent dents to their wallet, and they don’t have a single penny to show for their hard work.
Don’t take the property ladder lightly. It’s an extremely volatile market that requires a lot of planning, calculations and considerations. So to help you avoid these pitfalls, here are some tips and how to avoid making irreversible mistakes.
Don’t go with the flow, have a plan
Don’t do this. Don’t come into the market without a plan, don’t change your strategy as you go, and don’t think that you can just “go with the flow” and expect to make money. Do you see a house that you think it a bargain? Chances are that it’s not and you’re just acting on instinct instead of well-researched information. Make a plan, discuss it with your friends, family or partner, and form a strategy on what you plan to buy and sell.
Trust others and rely on people for help
You certainly won’t make it anywhere in the market if you aren’t willing to listen to others. There are many services available to you that offer everything from listing your property to offering rental properties advice, and unless you’re good with DIY and renovations then you need to get in touch with contractors. It doesn’t matter how knowledgeable you think you are on the property ladder, and it doesn’t matter if you’ve read hundreds of do-it-yourself property ladder guides—you will fail if you don’t seek help.
Don’t forget to do your research
To coincide with the last point—never go into the property ladder blind. Would you drive blind? Doubtful, so why would you invest in a business venture without your eyes open? You need to read as much information as you can (including this guide!). Wannabe real estate investors don’t understand a thing they are doing, and most of the time they aren’t investing with their own money. They’re putting their well-being at risk, but they might also be putting their family savings at risk. Don’t turn your real estate investments into a gamble—do sufficient research and educate yourself. Otherwise, you may as well just go to Las Vegas and throw your money at slot machines and pray.
Don’t overestimate the money you’ll make
Real estate developments and investments aren’t get rich quick schemes. The amount of rent you get from a property could be offset by repair costs that your tenants cause, or the fees you hastily accept might eat into any profit you could have potentially made. Consider all the fees and costs you have to pay before you accept a deal, or else you might be left with less money than you started with.