Entering the real estate market can sometimes feel like getting into a big maze.
You’re suddenly confronted with a sea of choices to pick from. And you’re not quite certain how to make the right decisions, under the given circumstances.
We’ve noticed some very common patterns to the mistakes people generally make in real estate and have listed them down here so that you can get started on the right foot.
Curious to find out what they are? Let’s get started.
Mistake #1: You don’t have a long term plan or strategy for your investment
So you’ve finally decided to invest in the real estate market, but don’t have a clear plan to follow. But you go ahead and invest anyway.
This is not quite the right approach to have with your property purchase, as an unexpected turn of events could eventually leave you anxious and puzzled.
You don’t want that to be happening to you, now, do you?
So, before investing, you need first to ask yourself, if you’re looking for a high-return, hands-on investment or a long-term, mostly hands-off investment.
In other words, what is your desired outcome with this property?
Solution: To avoid this mistake, start out by educating yourself about the real estate market and the ways you can use your investment.
Get in touch with agents, investors, advisors so that you have your foundations right and a team of trusted individuals around you to help you through.
Mistake #2: You underestimate your monthly expenses
There are always two types of costs associated with every real estate purchase.
First is the obvious cost of the property and the mortgage you bear for it. This is quite apparent to investors and buyers, as the numbers are very clearly put on paper.
However, this isn’t the only cost you should be considering while making your purchase decision.
What is often, neglected and even more important to consider while investing in a property is to account for the cost of living and maintaining the property on a month to month basis.
Trust us, when we say it – almost every one of us underestimates the impact of these living expenses.
Solution: The only way to avoid this mistake is to proactively list out all the monthly costs of running your home before you make the bid.
With the numbers added up, you’ll be able to decide for yourself if you can really afford the property.
Mistake #3: You want to do everything on your own
Many new buyers make the mistake of thinking that they can close a real-estate deal all by themselves. Without any assistance or advice.
Well, maybe we’re a bit biased here.
But with so many variables involved in the process of purchasing a property, things could get complicated and quickly out of hand even with a simple blunder.
Solution: Tap into every possible source of support and befriend experts/advisors whom you can turn to in order to make better decisions.
Mistake 4: You’re not aware of your credit score
Consider this scenario –
You inspect a property; you like it, the neighbourhood seems just about fine, and you’ve mentally decided to make the purchase.
You go to the bank to put your finances together. And then you have a shattering realisation. The bank is unwilling to finance your property because you don’t have a good credit score.
Now, how frustrating is that?
Solution: Don’t wait until the end to evaluate your credit score. It is one of the first things you should be doing before you start investing in property.
Make sure your credit history is clear or else your choices could shrink.
Mistake #5: You don’t understand the seller’s needs
While you need to be crystal clear about your specific needs and priorities pertaining to the property you’re interested in investing in, a successful transaction between a buyer and seller is executed only when the investor takes the time to shift his focus towards understanding the other party.
What we mean by this is, that if you can get to know, what the seller really cares about, and what they want, then it would be much easier for you to find common grounds for a successful negotiation in the sale.
Solution: Dig deeper in your conversation with the seller to understand what his underlying interests are in selling the property.
Summary
Well, there you have it. Some of the most common mistakes that people make in real estate.
Whether you’re a newbie or an experienced investor, revisiting the basics is always helpful. Avoid these mistakes, and you’ll have yourself a lot of hassle and frustration for time to come.
This article was originally published on www.thehindu.com
