Lethal mistakes every property investor should avoid
In Singapore, where land is scarce, property and real estate investments are extremely popular among investors. With property prices on the rise, many are purchasing prime pieces of property and renting them out or selling them for a profit. While investing in real estate can be profitable, there are numerous mistakes that can cost an investor dearly. So just what are the pitfalls and classic mistakes you should avoid?
Five deadly mistakes in property investment
Not doing your homework
Before buying a car or a new television set, most people compare different models, conduct research and ask a lot of questions before deciding on their purchase. That’s because everyone wants to be assured that what they’re purchasing is going to be worth the money. Yet, incredibly, many wannabe real estate investors don’t think twice about putting their financial lives at stake by not doing their homework. Don’t put your financial security on the line. Learn everything you can about your investment. Ask loads of questions and do your due diligence, it could make the difference between you gaining a profit or suffering a loss.
Getting the wrong financing package
With numerous loan packages on the market, picking the right one can be tricky. Investors often have to move very quickly on their deals, which results in many signing up for financing packages without calculating risks that can affect their ability to pay back the loan. But home loans, if managed properly, can release much-needed funds to expand your portfolio. The key is to never over-borrow and always ensure that you have the financial flexibility to make your payments.
Paying too much
Searching for the right property to invest in can be a long and time-consuming process. That’s why when prospective buyers finally find a house that meets their needs, more often than not, their eagerness ends up in them overbidding on it. This leads to a waterfall effect of problems that range from overextending themselves to not making a profit. To avoid this, buyers should realise that there are always other opportunities available, and odds are it will be something that meets their needs. It’s just a matter of being patient.
Many people think that the cost of buying a property is nothing more than the value of the house itself. But there is way more to it. Before you actually manage to sell your house, you have to consider the cost of maintaining it. Then there are repair and renovation costs, which can add up to a huge chunk out of your pocket. That’s why, before investing in a property, you should always make a list and estimate the monthly cost of actually maintaining a house. Only then, will you have a clear picture of whether you can really afford it.
Acting as your own real estate agent
Many real estate investors think they know everything there is about a real estate transaction, given the number of successful deals they have made. While they may have met with success in the past, things can quickly turn sour especially in a down market. That’s why you should always hire a professional real estate agent to help you. That way, should anything go wrong, there’ll be someone to take care of it.