Common Mistakes in Property Investments to Avoid

In any investments, your goal is to accumulate wealth and reach your financial goals within a period of time. However, inexperience investors may make a few common mistakes in property investments. If they are not careful, they can easily lose money, instead of making profits from property investments.

Some of the common mistakes in property investments are:

Emotion-Based Decisions

Failed property investments could also be contributed by emotion-based decisions. For example some may just buy the property, after being persuaded by the property agent. In addition, another example is the owner not willing to sell due to being too attached with the property. Successful investing is purely a numbers game and it’s done without any emotions.

One of the biggest challenges is in studying the numbers on the potential property. It takes discipline and experience to pass on properties that may look good initially, but don’t stack up number-wise and vice versa. Before investing in properties, ensure purchase decisions are based not on emotional reasons, but on sound facts and figures. Whenever in doubt, it’s advisable to listen to more opinion of qualified person.

Listening to the wrong people for advice

Many beginners started off by listening to friends and family members. They get free advice on what works and how to succeed. What they may not realize is that free advice can be very expensive. Sometimes, you might be listening to your friends and families who might not be familiar with the surrounding area where you intend to invest. They might not be aware of the prospect of that area, and may discourage you from buying. This may result in you losing out on that great investment opportunity. You can easily overcome this by calling our expert property consultant, who should be able to advise you on some of the market outlook and location analysis of the potential in certain areas.

Insufficient research

It is definitely not that difficult to find properties for investment. However, finding the one property that is profitable is another story. Many become so excited about owning a property that they get blind-sighted. They may buy a property that looks good on the surface rather than investing time and effort doing research.

Normally, this would include researching in detail of a few specific locations of where you intend to invest in. Next, speak to agents or consultants for that area, which may be able to advice on the prospect of the area, as well as the historical transacted prices of the area.

By doing these, you will have a solid knowledge to determine which property and location makes better investment sense. When the right property in the right location comes up at the right price, you would be able to confidently purchase it without any hesitation.

Lack of direction and commitment

Treat your real estate investments as a serious business and not a hobby. If you treat real estate investing as a hobby that you do whenever you feel like it, you’ll get hobby results. If you set aside the time and treat is as a business, you’ll be able to earn a profitable outcome. If you are fully focused on your property investment business, you will put in the effort to do full research, to engage with property agents to understand about the prospect of the area as well as to aggressively look for buyers or tenants for your property. It certainly makes a difference if you put in full commitment into your property investment business vs investing as a hobby.

Paying Too Much

Another property investment blunder is paying too much for a property. Paying in excess of a property’s worth requires time to recoup the extra expenses and lowers your return on investment.

While individuals who buy property to live in are prepared to pay more for emotional reasons, or the intrinsic value, investors should always aim to pay the fair or lower-than-market price. Conduct thorough research on the area and compare prices to ensure you can get a decent return on investment. Also, get your own verbal valuation check by yourself before confirming your purchase price. Do not just rely on words of the property agent. In property investments, profits are made at the point of purchase, and not at the point of sale. 

Higher risk of buying sub-sale property vs new launch property

Buying old properties are riskier as compared to buying brand new from a reputable developer. Obviously the older the property, the greater would be the risks. But this risk can be reduced when you take all the necessary precautions and budget additional expenses for repairs.

Therefore you must learn to be able to identify such repairs during your property site visit before agreeing to buy anything. Also, it is not like the owner will allow you to hire a professional inspector to inspect the house when you are just viewing the property with intention to purchase.

Conclusion

Property investment is very profitable and allows you to easily accumulate wealth if it is done correctly, and the investors avoid the common pitfalls in property investing. Sometimes, it is just as important not to lose money in investments in bad economy, as it is in making money from your property investments in good economy.