Real estate investments have been on the rise, but so is the concern that investing in this field is not any easy. Looking forward to achieve a fair deal from real estate investment has turned out to be a struggle to many investors. Believing that you have been an investor for quite some time, and knowing that you may have possibly experienced the hard times and hurdles that come with investments, I share with you some lessons that you need to focus on should you consider to venture into real estate investment.
1. Failing to pre- write your real estate investment deal.
Around 80 percent of people who invest in real estate fall here. Quite a number of people fail to calculate the revenue they shall get from the investment, and offset it with the expenses they shall incur during the investment. Worse still, these people do not take their time to evaluate the profits they expect to make after taking out the expenses.
The common result of such is that you end up with more cash outflow than inflow, and your money runs down to losses instead of profits.
2. Failing to work with real figures
Some people may have the time to write out the pre- investment deal. The problem is that these people end up using exaggerated figures and in most cases, they over quote the income while under quoting the expenses (more so by ignoring vacancies). The result is low to negative returns from the investment.
3. Underrating the renovation costs
Although home inspectors or real estate agents would always give a figure for the renovation costs, many at times these figures are always far much lower than the actual costs. It therefore requires extra research on renovation costs to help you come up with a working budget.
4. Improper timing for renovation
Getting a good schedule of when to conduct renovations for your estate is crucial. In addition to the frequency of renovation, it is wise to note that doing these renovations often take some time, and may at times run beyond the estimated periods. It therefore requires the knowledge of those who have some experience in this field to get the best rehabilitation schedule.
5. Not being flexible with the budget
Having the thought that something will cost nothing but the pre- stated cost is falsity. In fact, you will always find out that things cost more than what you actually planned for them. So as you draw up you budgetary allocations for the construction, rehabilitation and other expenses, be generous enough to have allowances for these values.
6. Comparing bonds and stocks to real estate investment.
Living on the assumption that these three forms of investment can be compared to each other is another major mistake new investors in real estate make. What they fail to notice is that unlike bonds and stocks, real estate is an asset that requires regular input, and cannot just be waited upon to multiply by itself. Moreover, collecting rent and maintaining the property can be very stressful and time involving.
7. Assuming real estate is a sure thing
Many new investors in this field think that investing in real estate has a sure return. They fail to understand that the investment will need extra work to see it thrive to success.
8. Changing over properties.
Quite a number of real estate buyers today think that they can earn more by changing from one property to another. A sure thing is that many lose their money in doing this as they believe in what they watch on their televisions and live the unrealistic investment life.
9. Expecting low levels of risk
There has been a misconception that investing in real estate faces low risk. What is evident is that every investment is equally risky, and what matters is the measures the investor takes in mitigating these risks.
10. Believing other people’s success stories.
Thinking that you will succeed in the field of real estate just because your friend featured in the new listings in Vancouver is another common mistake new investors in real estate make. In the real sense, these people may have dug into other investments to rescue their real estate investments, but this is always kept behind the curtains. It is advisable to do an in-depth research on these success stories and make tangible conclusions from them.
So next time before you make up your mind to put your money into real estate, kindly do a well-informed study on this field to avoid plunging your hard earned monies into losses.