Investing in real estate is a paradox of sorts – it is both easy and complicated. When done with diligence, you can create a substantial investment portfolio. But if you become greedy and lose sight of realities, you end up losing everything. The subprime mortgage crisis of 2008 is a prime example of how greed destroys everything. If you are into real estate, or planning to enter one, here’s a list of common real estate mistakes to avoid:
This old adage is especially important in the real estate industry. People buy homes because it comes at a bargain, only to learn that they don’t have the enough to make ends meet. And then there are others who purchase repossessed properties, only to end up spending a fortune on renovations. We’ve also seen investors running hither and dither looking for properties worth investing, but zero in on none.
Did you know that Japanese knotweed is a particular nasty type of weed that’s almost impossible to get rid of? Also, that they can eat into the value of a house? A seemingly simple problem can become a huge nuisance and even disrupt the entire investment train. Research gives you the common sense to avoid simple but problem causing consequences. The only way to avoid this is to ask questions – is the property in a flood prone zone, or, research about the neighborhood.
Investing your emotions are understandable if you plan to live in the house. But if the property is for investment purposes, logic should dominate. By allowing your emotions to take precedence over judgment could lead you into overpaying for a house. Sound analytical research can help you make good judgment.
Thanks to the multitude of self appointed gurus, there are far too many first time investors who think property investment offers quick returns. Unless, you are into real estate trading, it is impossible to make money quickly. Here again, traders wait for a few months, until they make profit from their investments.
There are plenty of mortgage lenders ready to offer loans that sound exotic. And the gullible first time investor always manages to fall trap into these options only to end up losing the property and falling further into debt.
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