4 Common Mistakes of Real Estate Investors And How to Avoid Them

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When you find a house and lot in Angeles that you want to invest in, what is the first thing that you must do? Should you look for the developer or owner and purchase it right away? Contact the broker and arrange to handle the real estate transaction for you? When it comes to investing in real estate properties, there are classic mistakes to avoid, maximizing the profitable returns. Below are some of these common mistakes you ought to know so you may prevent yourself from committing these common mistakes.

Mistake #1 – Lack of  Necessary Research

When buying a car, you go on with comparing the makes, models, brands, etc. You ask lots of questions whether it is the right car for your needs and if it can save you money, among other things. Basically, you want to know if the purchase is worth your hard-earned money. The due diligence involved in buying a property must be even more rigorous than the purchase of a car.

As an investor, you should be asking questions not just about the house and lot, but also about the neighborhood where it is located. What good is a landed house with a charming curb appeal if it belongs to an area where the crime rate is high? Is the property located in a problematic area (i.e. flood zone or termite infestation)? You need to know these things before making a purchase.

Mistake #2 – Underestimating The Expenses

All homeowners understand that there is more to owning the house than just monthly repayments. The costs involved that are not know to first-time investors eventually lead them to be house poor and cash poor. These are the monthly recurring expenses dedicated to operating the household as well as the special costs. What are these costs in particular?

First are the maintenance expenses for the upkeep of the interiors and exteriors. Second are the repair costs to ensure that furnishing, fixtures, and appliances are working optimally. Third are the legal duties of every property owner such as the property taxes and insurance payments. If structural changes are needed, this will entail additional cost. Bottom-line, when buying a house and lot, you need to factor in these costs to determine if you can truly afford the house.

Mistake #3 – Lowering The Volume

Many real estate experts argue that if you are working on one real estate transaction at a time, then you cannot consider yourself as an investor. A real investor is always on the lookout for hot deals, keeping a steady pipeline of prospects. If you do this, you’d be able to compare the real estate deals and focus on the ones that will give you the highest returns possible. So-so investors fail to weed out the marginal deals only to realize in the end that the property can only allow them a 5% profit.

Likewise, you must remember that not all deals are created equal. And exit strategies must be well-planned. If you have small volumes of landed or flipped properties and the only plans you know are selling or renting them out, you may be at the losing end. As an investor, you should have at least three strategies to liquidate a deal. Always have plans A, B, and C and if possible, plan D.

Mistake #4 – Doing Things By Yourself

At its most basic level, real estate investing requires the inputs of an agent, appraiser, attorney, and lender. You cannot build your business if you haven’t established good relationships with these people yet. And you cannot do that if you are busy fixing a leaky faucet or repairing an electric fan. You don’t have to do it all. The secret lies in building a team of professionals. Even if you know it all, you will also need the help of a handyman and cleaning company.

Tap on all possible resources, befriending the right people that can help you in making the right purchase. These professionals can always alert you if something’s wrong with the property or neighborhood that may haunt the deal down the line. Be reminded that in real estate investment, every mistake is costly. You don’t want to overspend on a property and sacrificing your capital on other real estates that would have given you a higher return.

Are you making any of these mistakes? If yes, it is high time to rethink your strategy. Investing involves lots of risks. If you don’t proceed with caution, you will end paying the price and a high price at that. Do yourself a favor – research, research and research first before you embark on the purchase. It would do you no harm to do this. In fact, you are doing this in your favor. After all, we are talking about a sizable amount of money here – an amount that is hard to earn and easy to waste. Don’t commit these costly mistakes and take heed.

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About The Author

Dominique Santos is a blogger and also a big fan of anything about interior designing, writing home decor tips and guides specifically. He is also writes about real estate and currently blogging for Amaia Land, developer of estates and condos in Manila, Batangas, Bulacan, Bacolod, etc.

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Dominique Santos is a blogger and also a big fan of anything about interior designing, writing home decor tips and guides specifically. He also writes about real estate and currently blogging for Amaia Land (website link below as home icon), developer of estates and condos in Manila, Philippines

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