5 Real estate Investment Mistakes Buyers Keep Making
Several people have made real estate investment mistakes and keep making the same mistakes over and over again. Most people make these mistakes repeatedly because they are not thoroughly schooled on the real estate processes.
There are several mistakes that real estate investors make but there are 5 common mistakes that investors keep making over and over again. Reading this article means that you do not want to be a victim of these mistakes. Below are the 5 real estate investment mistakes to avoid.
1. They believe that prices will keep going up
It is advisable to study the real estate market properly in order to understand the market better and find out exactly how, why and when prices go up or down. People often say that there is a sudden recovery in the market and prices are going up with immediate effect. If real estate investors buy properties at the wrong time in Nigeria, how long does it take to recover their losses? If property prices go up in Nigeria, why are buyers still making huge losses along the way? These are
questions you should ask when you want to make an investment into any real estate property. Prices in the real estate market tend to be flexible or could change over time.
2. Looking at the numbers isn’t their concern
Every real estate investor should carefully study the 2 set of numbers before they make any investment which includes the ROI calculated numbers and numbers in the real estate market.
- ROI calculations:
Real estate investors should make calculations on cash-on-cash return and their net income for the first 3 years. Do not make the mistake of thinking that you are buying for your own sake and maintaining a positive cash flow is not applicable to you since you are
buying for your own stay. Most real estate investors buy properties for the Return on Investments through the rental return and questionable holding power. Their decisions to use different means to earn double or more than double of what they have invested in as well as cut cost and go for a fire sale at the same time will definitely impact the value of your real estate property.
- Numbers in the real estate market:
The data for any real estate property includes future supply in the pipelines, vacancy rate, past transactions of new sale, resale and rentals. Having access to this data of information can help you avoid property investment mistakes. People tend to look for and interpret the information that confirms the preconceptions that have existed in their minds while filtering out information that has opposite views. It is good to hear someone say the
right thing at the right time and for this reason, you should be smart with the information you get. Make the numbers work in your favour.
3. The only reason they buy is because they can afford it
You have some deposits to make for the home purchase from your savings and after you sign on the option to invest into a real estate property, you are ready for all the risks that could come with the real estate investments which could be a hike in interest rates, negative immigration or market uncertainties. There are two types of people who can’t be shaken by a market crash and they include the following;
- Those who immediately see the value of an asset:
while the value is tagged for something that is really worth it, the price is the amount you pay for something. The real game involves identifying the discrepancy between market price and what an asset is worth. Great investors see
the value of an asset and will find the means necessary to acquire it. They can afford many things but would not invest in any property that is not worth it because to them, they believe it is not worth investing. Ordinary people can’t tell the difference between the price and value of a real estate property.
- Those who think they can’t afford it:
When the market is very hot due to the hike in market prices, people often lament and can’t afford
private properties but they fail to see that the biggest tragedy is coming to the realization that you can’t pay up after making a commitment and as such you get an outstanding loan that is higher than property’s value which will take several years before you can break even.
4. They allow others to make the buying decision for them
Most people just go along with whatever is presented to them rather than think for themselves and this can pose a huge problem. It is totally
odd to leave the buying decision of your dream property to a total stranger who only cares about their jobs and commissions. Can you tell the difference between a nonchalant real estate agent and a good adviser? Most real estate agents are very good advisers. They listen to your needs and give you good advice on how to achieve what you want rather than giving you the power to help you make your decisions. He or she can show you both sides of the coin so you can see the big picture. A good real estate agent will tell you about the pros and cons, shares with you everything you need to know by giving you real information, and will never make a decision for you but leave you to make a wise decision yourself.
5. They trust that the professionals know what they are talking about
The media is one of the channels for inaccurate prediction of the real estate market. Most real estate stakeholders are not genuine about giving advice when they put their interest first before the interest of the buyers. One way to defend yourself against bad advisers is to avoid them altogether and chart your own financial future. You can also work with a trusted real estate company like DpKay Homes to help you plan your financial future with the right real estate investment plan.
Are you planning on making investments in the real estate industry? Avoid these mistakes as well as many others by contacting us today for
proper guide and professional advice.