Buying properties for investment purposes is a good way to make the most out of your hard-earned money and secure your future and that of your family. However, it's important to remember that investment properties do not offer a get-rich-quick scheme; rather, you need considerable amounts of time, hard work and funding for your investment to eventually pay off. For those who are new to investing in properties, the prospect of earning large sums from your purchase may sound really exciting, but it's important to keep calm and think of the future in an objective manner. To help prospective investors, the head of the Berkeley Capital Group, shares the four most common mistakes that new investors must avoid:
Diving into investments without a plan - Investing in real estate is more than just buying a house, fixing it up and selling or renting it out in the future. There are many factors that will help influence the success of your investment, such as the state of the economy and future developments for the area where your property is located. It's important to think your plans through and prepare well to protect yourself from failed investments - you have to take into account factors that will affect your property and carefully assess whether it's worth the risk or not.
Not doing enough research - Before entering into the business of real estate-or any area of business, for that matter, it's best to understand first the ins and outs of the system. Doing adequate research also protects you from failed investments in the future because it helps you determine whether the property you are buying is truly profitable. More importantly, doing research on properties you are interested in will help you avoid paying more than what the property is really worth.
Not getting assistance from experts - People who are new to investing often think that they can do things themselves. Adequate research does equip you with the basic information needed to make a successful investment; however, there are certain tasks where you will still need professional assistance, such as during property appraisals or inspections for damage. If renovation is also part of your investment plans, experts can still help make the process easier for you. As a new investor, it's important to acknowledge your own weaknesses and learn to know when it's time to call in for help.
Underestimating costs - Taxes and renovation costs can take a significant amount out of your future earnings, so it's very important to be realistic about them. Don't buy a dilapidated house thinking that you'll only need a few cans of paint to make it ready for the market. If you can't assess how much you will be spending on taxes and renovation, consult an expert and get an estimate for these expenses.
Based on the article by Georgia K San