It is very easy to get the impression that making money in the real estate market is simple and requires no planning. The fact is that successful real estate investors of today have made mistakes, they have lost money but they have learned from their mistakes and live to fight another day. It is therefore sometimes interesting to take a look at common property investment mistakes with the intention of avoiding them in the future!
Failing to plan your property investment
Fail to plan is planning to fail! As we touched on above, when you read the stories of successful property entrepreneurs it is very easy to get the impression everybody is making money. Unfortunately, some property investors are swept along on this tide of optimism and fail to plan their investment strategies and put the correct finances in place. Even the most experienced property investors will have both an entrance plan and an exit plan for any investment. While these plans may be revised in the future at least they have a blueprint to work upon.
Get rich quick
Historically property investment has done extremely well in the longer term although property price graphs will show you various peaks and troughs over the years. There may be occasions where you are lucky enough to acquire a property and turn it around for a particularly large profit in a short space of time, but these are relatively few and far between. It is no surprise that successful property investors of today have been around for many years and have great experience in this field. They may have tried the get rich quick ideas in the past but eventually all successful property entrepreneurs will take a longer term approach.
Overpaying for property
When acquiring a property, whether through a private sale or an option, it can be very easy to get carried away and pay over the odds. It is very often those who allow emotions to play a part in their investment decisions that get carried along on a wave of optimism and end up overpaying for a property. While in some circumstances you can be flexible on price, give or take a few thousand pounds, for a property, do not overpay for any asset if possible. Remember, every pound that you overpay for a property is an extra pound that you have to make up in the future.
Lack of due diligence
While regulations covering the worldwide real estate market have been tightened somewhat over the years, investors still need to do their own due diligence. Ignorance is not an excuse if you make a mistake when investing in a property because unless there has been deceit or misleading statements in the sales pack you will have no legal recourse. Whether you do your own due diligence, as you gain experience, or hire the services of a professional party, you should never try to cut corners with this important part of the investment process.
These are just a few of the simple but potentially costly mistakes which many property investors continue to make in their early days. While some investors may live to fight another day, one costly mistake could bring down the finances of an individual and leave them financially destitute. Read the financial press, follow the markets, read the opinions of the experts but also do your own due diligence and research. At the end of the day, the buck stops with you…………