Investing in real estate is often the go-to for people who have some spare capital that they would like to put to good use., After all, the property market is a lot easier to understand than the stocks and shares market or cryptocurrency trading. However, it is not quite as simple as many people realize, and a lot of newbie real estate investors have been caught out by one thing or another and not done as well as they could have.
With that in mind, I’ve put together a list of the most common signs that you could be doing real estate investment wrong. Spot any of them, and you may need to change your approach.
You haven’t made a plan
One of the most common signs someone is doing real estate investment wrong is that they are simply putting their money not a property without having any kind of plan for what they’re going to do with it. Sometimes, this can work out well and the investor is able to sell on for profit, rent out for a decent yield, or whatever but often it doesn’t and they’re left with property and no idea what to do with it to make money. That’s why you should always sit down and decide whether you want to flip, rent out, renovate, or whatever. Once you know what you want to do, you can more easily find the perfect properties for your goals and maximize your returns.
You don’t do any research
Whether you’re looking to buy a luxury apartment in the Bandar Seri coalfields of Malaysia to turn into a vacation rental or a do-er upper in your own neighborhood that you can flip for a profit, if you want to do real estate investment right, you will need to do your research. If you don’t do your research, not only will you not know which areas are most sought after or which areas are up and coming so you can steal a bargain, but you won’t know which properties are in good condition or which are best avoided for a whole host of reasons. You also will struggle to know how much you should be paying for a property or how big your renovation budget needs to be. Basically, you’ll be taking a shot in the dark and that rarely works well.
You don’t seek help
Many people who are new to real estate investment thinking they can save some money and maximize their returns by doing everything from finding and making an offer on properties to renovating their purchases themselves. There are maybe a handful of people who can do this well, but for most people, it is a disaster waiting to happen, realtors, lawyers, contractors – they are all seasoned professionals who know what they are doing and who are able to get the best possible results for their clients. If you want things to go as smoothly as they possibly could, you need their help. Yes, you will have to pay their fees, but if that means you can buy a house for less or sell one for more, it really is worth it – you’re still going to be potentially thousands of dollars up at the end of the day.
You’re a poor landlord
If you plan to invest in real estate to let it out to tenants, you need to be very mindful of how you behave as a landlord. If you are the kind of landlord who doesn’t deal with repairs in a timely manner, ups the rent with no justification and basically just treats your tenants badly, chances are word will get around and you will struggle to fill your rental properties for long, or even at all. Being a good landlord means being there, being fair, and dealing with any issues as quickly and painlessly as possible. You should do this not just for your tenants, but also because it will benefit your business, and your bottom line, positively, too.
You don’t seek the best mortgage deals
If you sign the first home loan agreement you come across, chances are you aren’t getting the best deal. Many lenders offer special mortgages and home loans for investors and often they come with more favorable terms for the real estate entrepreneur. You will need to shop around to find the best deals for you, and a failure to do so could mean that you spend more than you need to and lower the benefit of your investment significantly over the years.
If you can get a fixed-rate mortgage, this is often a good idea because you will know exactly how much you need t pay each month with no steep rises or nasty surprises. If you can find a mortgager that also allows you to overpay without any penalties, that would be a bonus as you can clear your home loan at a faster pace and thus save money over the course of several years.
You underestimate the costs
Real estate investment comes with various costs and expenses like maintenance and renovation costs. If you fail to actor these into your business plan, you will very quickly find yourself overwhelmed by the burden you face, and you could end up nowhere near as well off as you thought you would be. So, before you do anything, sit down and list every expense you could conceivable have from the cost of mortgage repayments t property taxes and fixing appliances. Then, draw up a budget that takes them all into account. Only then, if you feel like you can afford to move forward, should you think about investing in your first piece of real estate.
You’re not taking it seriously
Some people think they can buy a house, rent it out and then forget about it. That’s not how it works – investing in real estate may not be as much work as spending 40 hours each week in an office, but it does require your ongoing input, and you do need to take it seriously.
If you notice you’re doing any of the above, change your ways and real estate could be the greatest investment you ever make.