Eyeing your first ever real estate investment? Let this be a guide before you make drastic and crucial decisions. Observe the common mistakes of real estate newbies and understand what you can do differently.
1. Impulsive Investment
“It felt right!” First time buyers, being unaware of key real estate matters, rely on their own instincts. Others let their feelings and emotions get to them and think it was “love at first sight.” This problem is usually caused by being fixated in the mentality of buying their own home when you are, in fact, buying as an investment. Having a subjective view on properties is not practical in investing; potential buyers might not perceive an individual’s personal visions. Not being able to justify your purchase on the basis of real estate standards will most certainly lead to a loss.
2. Skipped on Being Scrupulous
It could be in terms of inspecting the property or going over the paper works. There are several scammers who seek to take advantage of the innocent newbies because they know that these people are not thorough in terms of their “method” of buying. At the very least, sellers tend to sugar-coat their truthfully unappealing properties. Ignorant buyers will be deceived and be enticed to purchase properties that are presented with false information and claims.
3. Working with the Wrong Realtor
First time buyers try to compensate for their lack of knowledge by hiring an agent to support them in the transaction. But, here’s another problem: there are incompetent realtors in the market. Instead of helping buyers, they draw them closer to their imminent failure.
4. Obliviously Overpaying
This is a combined consequence of all the mentioned mistakes. Since a buyer has no idea of what he’s getting into, he will pay for a property more than its true market value and incur a loss in the long run.
Stepping Towards Success
1. Collect & Select
Don’t restrict yourself to one property. You’re free to have options and to weigh the pros and cons of each. Do several oculars in different properties that fit your preliminary conditions. From there, keep filtering or eliminating those that fail to reach your standards.
2. Set the Authority
Yes, you’re a newbie. But that doesn’t mean you have to be pushed around in the real estate world. You’re a buyer and you have the capacity to buy; that’s enough to give you power. Don’t let agencies and sellers make the decisions for you.
3. Do Appraisals
As a part of the inspecting process, appraising can be done to be informed by a property’s market standing. This way, you’ll know if the seller has a fair price.
4. Think of the Future
Essentially, you’re making an investment. It’s only necessary that you study the future
5. Hire a Legitimate Real Estate Agency
If you can’t do it on your own, there are numerous real estate servicing companies that can provide you with every help you need!
The Trend: Condominiums, should you join in?
High rise condominiums are being developed everywhere as vertical constructions are getting more popular than horizontal. People are also putting their money in it; either buying as their own home or as an investment.
It is arguable that buying a condo incurs a lot of costs (condo dues, etc.) in which will cancel out a lot of the cash in-flow even with the appreciated market value. Then again, if you are investing only as a secondary source of income (meaning your time is consumed mostly at work) buying a condo can still be a viable and profitable option given the following:
1. Low Maintenance
The condo will increase its price in the future without making any developments and modifications in the property. Buy it, wait for the market value to increase, and sell it. If the costs are controlled, it’s easy money.
2. Cheaper by the Dozen
There are companies who offer cheaper prices to buyers who will purchase more than one unit. With this kind of discount, the investment will be able to yield more.
3. Thriving Market
Students, young professionals and newly-weds are always looking for a condo to rent and own. They are your potential clients and you should bring yourself closer to this market and make connections.
The challenge here is how you are able to manage the costs and how you can sales talk your clients into agreeing with the price that will reward the investment risk. Playing the investment game presumes the possibility of a loss in which should be justified by the proportional amount of return.