It is a common notion that real estate investments guarantee massive gains once you get into the sector. While this may be true to an extent, investments do not always go as planned, especially if you do not take the necessary steps in securing them.
Everyone is prone to make mistakes, including real estate investors. However, these mistakes can be very costly if care is not taken and should be avoided by all means. In this article, we’ll be looking at common mistakes investors make and how they can be avoided.
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Who is a Real Estate Investor?
A real estate investor is someone who invests in any of the wide range of investment opportunities available in real estate. These investments include property development, land banking, land flipping, rentals and so on.
Real estate investors have to consider a variety of factors before making investment decisions such as the location of property, condition of the property, documents available and their authenticity and so on. They also work in hand with real estate agents and lawyers to ensure a smooth transaction.
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Common Mistakes Real Estate Investors Make
Some common mistakes real estate investors make are;
Improper Planning
A major common mistake investors make is not taking the time to properly plan for the transaction. Proper planning should always precede a sale or purchase to avoid losing funds along the way. When a new deal comes along, it is important to plan properly and adequately before deciding whether to jump on it or not.
Flying a Solo Plane
Many times, real estate investors try to do it all on their own, get overwhelmed and then begin to make little errors that eventually have a large impact on the outcome of the investment. As the saying goes, “two heads are better than one”. Having other people review a deal might reveal things you did not see at first probably due to excitement.
Lack of Proper Research
Real estate investing is not a straightforward process as many try to make it seem. There are a lot of things to put into consideration when trying to make an investment, and this is why research is important. Although, you might have a gut feeling that the deal is one you should take, it is important to carry out due research on the property before investing. At this point you would have gone past your emotions to properly analyze the deal.
Ignorance of the Real Estate Market
The real estate market is one that should not be overlooked as a real estate investor. The market trends determine how much profit you make and the investment returns you get. Many investors make the mistake of just listing any property on the market without considering important factors involved. If it’s not suitable for the market at the time, they tend to lose money and end up selling at a much lower rate than they planned.
Lack of Sustainability Plan
Many real estate investors do not think of the fact that properties have to be maintained and repairs have to be made. This involves money and when not planned for puts a strain on the budget.
How to Avoid Mistakes Real Estate Investors Make
Plan Properly
Plan properly for your investments. Decide what you want to do with the property before going ahead to purchase. If you do this, you might eventually find out you do not need it and this has saved you time, effort and money.
Work with an Investment Team
Have an investment team to help you review deals when they come your way. This should consist of required professionals in the real estate sector such as a real estate agent, real estate lawyer, property manager, home inspector and so on. They would help you successfully navigate through the complexities of real estate and simplify the process for you.
Conduct Thorough Research
As a real estate investor, you should not take research for granted. This is also why you must be constantly learning about the sector you are in. Read books, attend industry meetings, network with other experienced investors to gain expert advice on the real estate investment terrain.
Observe Market Trends
The real estate market is one that is not so easily predictable. You have to constantly observe market trends to know what kinds of properties should be listed in a certain area or city. This also means considering key factors such as location, land value, property appreciation Value and so on.
Have a Budget
When drafting your budget for an investment, you should include the cost of managing and maintaining the property so you are not caught unawares. You should decide if you want to hire the services of professionals or want to do it yourself.
Check Out Residential Real Estate Investment in Nigeria
As a real estate investor, you must take due diligence to be adequately prepared for the requirements that come with it. This will help avoid costly or major mistakes and enable you to make the profit you desire to make in real estate.
MKH Investment offers real estate consultancy services to help you avoid costly mistakes and ensure you invest your money in the right places. You can contact us for more information here.