5 Common Mistakes Beginner Property Investors Make and How to Avoid Them
Category : Property advice
Unfortunately, first-time property investors are always at risk of making rookie errors, when it comes to buying their first property. This could be due to their lack of knowledge of the property sphere and the tricks of the trade, or perhaps the absence of adequate guidance from already established investors. Whatever the case may be, you want to be sure that when you start your property investment journey that you avoid common errors. This is done by staying informed, learning from others, and thoroughly planning your every move before taking action.
Even the expert property investors were once beginners making ‘rookie errors’, but luckily, we’re able to learn from their experiences, and as a result, avoid their mistakes.
See our list of common mistakes made by first-time property investors:
1. Investing without a plan
Investors who invest without a plan are on a sure path to failure. With property investment, it’s vital that you know why you are wanting to invest in property, and how it’s going to benefit you, either now or in the future. You may need to do some number-crunching to know for sure what your investment capabilities are, and how you can profit from your specific situation. This will help you to understand what kind of property you should invest in order to make a sufficient income. You first devise your plan, and then you go about looking for the property that fits your vision – not the other way round.
2. Not doing their homework
Beginner investors often forget crucial steps in the deal-making process. Instead of analysing the picture as a whole, they focus only on the positives of the deal; taking action based on this alone. It’s essential that you examine every aspect, in order to make an informed decision. Due diligence is an incredibly important factor. One should be certain of the costs involved in investing in, and maintaining the property, as well as the market conditions at the time of buying, and the forecasted market conditions – should one want to sell or rent out the property in the near or distant future. Property investors should never invest based on the assumption that the property will appreciate in value. Without information to support this assumption, there’s a good chance that a poor, uninformed decision will be made.
3. Lack of quality financing
Lack of quality financing is another reason why first-time property investors often fall short. It’s imperative that one shops around and finds the best deal when it comes to property financing, instead of settling on the first offer. Lack of research could mean you end up making a loss, and you want to avoid this at all costs. There are many organisations that offer great deals on property finance, but you’ll only be aware of this if you do your research and compare the options offered by various financial institutions.
4. Buying based on emotion
Emotion should never get in the way of logic when it comes to investing in property. It’s not enough to fall head-over-heels for a property, you need to know that it’s going to be a solid investment that’s going to see you financially benefit now and in the future. Ask yourself whether the property is located in an area which will add to its value and whether it will attract quality tenants. Will the property generate the gains and returns you’ve planned for? What are the downfalls of buying the property, and what are the upsides?
Unfortunately one has to take everything into account if they’re serious about making a good investment. Buying a property because it’s the home of your dreams, is not the way to invest.
5. Either acting in a hurry or procrastinating for too long
In the world of property, there’s no space for foolishness or fear. Foolishness is believing everything you hear, never negotiating or sleeping on a deal, but rather acting in a rush. This is a sure way to make huge mistakes and waste plenty of money. However, you can’t be too slow either. Procrastinating for too long could mean missing out completely. The best way to go about the situation is to first tick every box – ask the right questions, do your research, negotiate and think about your moves.
Once this is covered and you’re confident, act in a proactive manner without hesitation.
Source : Think and Grow Rich