Published on April 23rd, 2015 | by Day Trader
Three Huge Mistakes Amateur Property Investors Make
For many people, the answer to the question “should I invest in real estate?” is an unequivocal yes. After all, the property market is often more stable than the stock exchange, and commercial real estate offers a number of ways to make regular profits, from rent payments to various tenant fees. However, if you’re considering this opportunity, it is important to remember that a number of common mistakes can turn your experience into a financial nightmare. Keep your investments secure by avoiding these lethal blunders.
Planning As You Go
It isn’t enough to simply buy a property you love: you need to know what exactly what you plan to do with it and how it fits into a larger scheme that will help you succeed. If you don’t outline your plan from the beginning, you will only lose money instead of gaining it.
Going In Alone
Even if you have years of experience in the real estate industry, you will likely need some help finding, purchasing and maintaining your investments. As a result, one of the biggest mistakes you can make is failing to forge relationships with real estate agents, appraisers, home inspectors, a closing attorney, a lender and various contractors. Some investors even decide to work with real estate partners or real estate investment trusts (REIT), which function almost like mutual funds but with property instead of stocks. This helps investors obtain quality properties while taking care of the maintenance and other responsibilities. You may have to do some research on how to invest in a REIT and the best group to work with, but the effort will likely be worth the results.
Failing to Research Before Making a Purchase
While it is often important to act fast if you don’t want to miss an opportunity, an investor must exercise due diligence to make sure a property won’t end up draining their finances in the long run. This includes considering any repairs the property might need, thinking about future maintenance costs, estimating reasonable returns and more. This is often why it is preferable to work with real estate partners: these groups usually have a great deal of experience in the industry, allowing them to ask the right questions and pick the best potential investments.