My parents are firm believers of owning your own property, and their outlook rubbed on me. It’s the same philosophy that my daughter learned from me.
Unfortunately, the property market has changed drastically to the point that buying property today can mean a lifetime of paying off debt. My daughter learned that the hard way when she and her then fiancé took out a home loan they thought was a good deal. You know kids nowadays – they think they know best because they have access to the internet. Suffice it to say, my daughter has been burned a few times, but she is learning now. And from her scars, come a few valuable lessons for those of you looking to invest in real estate.
Mistake 1: Getting A Bank Loan You Can’t Afford
A few years back, this wouldn’t have been a problem. Everybody was getting one of these adjustable mortgages (a huge part of the reason why we got into that all bubble busting mess). Today, however, people have wizened up. Instead of going with the very first offer you get, people have learned to shop around for the best possible rate. Go for fixed rates as opposed to variable interest rates that could quadruple virtually overnight. Learn to keep your excitement at bay. The first bank to offer you a loan will not be the last. Shop around for favourable terms and conditions.
If bank rates are still too difficult to meet (like coming up with 10%-20%), it may be best to look at more flexible contracts that can help you slowly build up to the deposit you need to get financing. Many investors are into flexible contracts, and they include names like Simon Zutshi, Mesud Sali, Sarah Barret and Rick Otton. You may check out their websites if you’re interested on how flexible terms work in a property contract.
Mistake 2: Rushing your returns
Suppose you are buying an investment property like a buy-to-let property, newbies are always eager to make money. They read about million dollar empires built by former newbie real estate investors just like them and they think that they can replicate that success overnight. With care and patience, you can actually build your million-dollar empire, but it will not happen overnight. It might not even happen over a period of three years and more. Yes, there is a good chance that you could make good money really fast, but that is more the exception than the norm. When starting out, expect to take time to get on the groove while making quite a number of mistakes along the way, so patience is key.
Mistake 3: Failing to create a plan of attack
Many newbie investors go into real estate looking to buy and sell anything and everything. This often leads to disaster. Real estate, like every other professional field, demands focus and pinpoint concentration. Decide whether you want to deal with HMOs, Commercial properties or single family homes and so on. There are very many different niches within the field. Find one that works best for you and focus on that. Do not try to be a jack of all trades. For starters, you will soon run out of cash and secondly, you may not have enough time to give each deal the kind of attention and due diligence it requires.
Do not make these little rookie mistakes that could end up costing you your investment and shooting your stress levels as well as your high blood pressure through the roof.Tags: buy and sell property, invest in property, mistakes property investors make, newbie property investing mistakes, property investing mistakes