Real estate investment is a cutthroat market, with lots of places to slip up. You might not have realised, but you could well be damaging your financial future by making common mistakes.
We aren’t referring to frequent amateur mistakes such as not researching a neighbourhood, either.
In fact, it’s this research stage that could be hitting your wallet the hardest. Why? Because it’s where most investors slip up.
However, each of these mistakes have a simple, straightforward solution. Read on to find out more.
Are You Making These Deadly Real Estate Investment Mistakes?
If you want your investments to succeed in the long-term, you need to ensure that you’re not making any of the following mistakes.
1) Fitting an area around your strategy
Without any doubt, having an investment strategy is important. However, being unwilling to change it on a case by case basis can have costly consequences.
For example, if you’re renovating a property for profit and are considering putting your money in Moreton Bay in Queensland, you’re probably going to be going after 30-year-old, unrenovated homes. However, this isn’t the type of home people in that area want. They’re largely high income individuals who’ll typically go after newer properties, not older ones.
As a result, it’s essential that you take the time not only to build a strategy and research a neighbourhood, but also to research the demographic within it.
2) Getting emotionally attached
Real estate is an emotionally charged business, and tensions can run high. However, you don’t want to get emotionally attached, as it can get in the way of rational decision making.
For example, you come across an expert who says that small units are the way to go in an area if you want to make big money. You get emotionally attached to the idea and end up heading down there with that idea in your head. However, units actually turn out to be about the worst decision you could make.
To make sure you avoid this mistake, do your own research and work out what’s in demand within that area, as opposed to blindly following the advice of others.
3) Relying on unsubstantiated claims
it’s understandable – as humans, many of us will opt for the cheaper, lesser alternative than the more expensive complete version. We understand the cliché of “you get what you pay for”, but we’re still all attracted to making savings in the short-term.
This couldn’t be truer with property investment advice. Trying to save cash by relying on cheaper advice is only going to cost you more money down the line, whether it be from smaller returns or a complete investment failure.
If you’re going to rely on a recommendation or report you’ve read, make sure that it’s backed up by evidence and gives you all the information you need. From this, you’ll be able to make an informed investment decision.
4) Going with the crowd
Safety in numbers might work in nature, but with investments, more attention doesn’t always equal more profit.
There may well be benefits of banding together to get better buying power, but this also comes with a huge risk. By joining with others, you’re instantly creating a lot of competition within that market. If an area has a large number of investors, it’ll boost the level of competition for renters and buyers when the time comes for them to sell.