7 Warning Signs that you are making the Wrong Real Estate Investment
The two most important things in life which is in our hand are marriage and real estate investment.Surprising? But it’s true!We use all our earnings & savings, take loans/mortgage, sell jewellery for what else, but to invest in real estate? In return, it secures our future and if well thought out gives us great return of investment.So a mistake in making the wrong Real Estate Investment can be very costly.There are 7 deadly signs that could mean you are wrong, so avoid these pitfalls if you are planning on buying a property.
1. Don't have a proper investment strategy
A well thought out financial plan should be your primary goal. First you must decide what your budget is, keeping in mind how much down payment you can make and the amount of monthly EMIs you can handle. Further if you need to get a loan, start searching for a scheme that suits you best. With the finance in place you can now confidently move onto searching for your property.
2. Not 100% confident about your broker
Consider your broker to be your friend, you trust him with your savings and he should be able to repay it with profitable real estate investment options. Question him, get some time to know his portfolio, his background and only when you are fully satisfied, take him on board.If possible take help from a renowned real estate agency; here I would like to share an incident shared by a fellow real estate investor to explain why this is important.
3. Thinking with your heart?
As much as possible “Keep emotion out of the equation” when deciding on the budget of your investment. Define your goals to yourself, think practically, calculate realistically and find out how much EMI you can actually pay and then stick to it.When emotions rule we always tend to make the wrong decision, in this case you might end up buying a house that you cannot afford.
4. Is greed guiding you?
Say you have got to know of a property ‘A’ which is a good deal. It matches all your criteria and suits your budget. However you decide to buy another property ‘B’ which seems to be offering you all the benefits of the earlier property but at a lower price. Soon you discover that ‘B’ has many hidden drawbacks. But by that time ‘A’ has already been sold to someone else.It is wise to commit to a good real estate investment if you are certain, rather than looking for more lucrative offers and losing the good one.
5. You are feeling impulsive
How many times have you been moved to action because an advertisement said that you are missing out on the opportunity of your lifetime?When it comes to a property most often advertisements claim that only a few are left to buy, it is done to create an image of exclusivity and scarcity in the buyer’s mind. It can be a genuine claim, but sometimes it may not be true. It is in your best interest never to rush into booking a property without checking if the claims are true or not.
6. Are you simply speculating?
Some amount of speculation or risk taking is always present in any kind of investment but when it comes to real estate investment guessing is best left for professionals. As a first time investor, sometimes people take an unsuitable loan for investing purpose in the hopes that the property’s appreciation in the future will cover for the loan amount. If it is not well researched, the property may not appreciate at all and you may end up losing money
7. Zeroed in on an old property?
The market is full of old properties that are good bargains though some may need a little bit of repairing or capital improvements. However before buying you should make a realistic estimate regarding how much actually the total repair would cost you. If you buy it without calculating, you may make an initial profit by getting it at a lower price but may have to spend double the amount for the repairs later.As prospective real estate buyers I am sure you must have thought of or at least faced one of the above mentioned points. If yes, please leave a comment below as to which one it is or if you have any other suggestions do share it with others.