Source- Unsplash - Tierra
Buying property is a great idea whether you plan to live in it, rent it out, or turn it over for a tidy profit. However, there are pitfalls, and it pays to avoid them because so much money is involved in the process that even the tiniest oversights can be catastrophic. To help you avoid a living financial nightmare, here are five common mistakes to avoid:
1. Going It Alone
Going it alone can work, but only if you’re well-versed in the real estate industry. Otherwise, you're playing an unnecessarily risky game. Instead, why not enlist the expertise of a commercial real estate agent who can offer you their insight and experience? Doing so will lower your risk of making a false move, ensuring you make a sound and secure decision you won't regret.
2. Overestimating Your Skills And Abilities
It might seem like a great idea to buy a “doer-upper.” Youtube can guide you through everything, right?
In a word: no.
If you overestimate your skills and abilities with a property, you can end up paying through the nose for last-minute contractors. Even worse, you might reduce the value of the property if your work isn’t up to standard. Be realistic about what you can do yourself and what you need to have handled by a professional. That way, you'll get a true understanding of which properties are right for your budget.
3. Ignoring Project Scope Creep
Doing up a home is a project, and so, it is open to “scope creep.” As the name suggests, scope creep occurs when the costs of the project (including not just money but also time and effort) subtly creep beyond the value of the project. This happens so often with investment properties, and for an abundance of reasons, including:
- Workers being unreliable
- Not keeping an eye on the budget
- Being unaware of hidden issues that were not identified before purchase
- Over-estimating the value of the property
- Allowing the project of refurbishment to run-on for too long
It is essential that you do all the initial checks to ensure there are no nasty surprises waiting for you down the track. In addition, creating a project plan that is not only followed but also constantly adjusted is vital.
4. Investing In Property Not Area
Sometimes it can be tempting to buy a home that is the biggest or fanciest, regardless of where it is. This ignores one of the fundamental rules of sound property purchasing: location is always key. Invest in an area that holds its value, and your property investment is much more likely to be successful, especially if you're in it for the long-term.
5. Not Striking The Right Debt Balance
Property debt – usually in the form of a mortgage – is part of the process of starting a real estate portfolio. However, overstretching your finances and ending up in debt that crushes your monthly budget is a bad idea. It might be sensible to get low or no-interest loans for small adjustments like decorating, especially when you can pay them back quickly. However, anything heftier should be considered a red flag – a sign you may need to shrink your budget a little to avoid excessive debt.
Purchasing property can be a great move towards personal goals and security, but it is important to avoid common mistakes that can be hard to recover from. Treading carefully and following the tips above can help you make sound decisions when you’re ready to take the plunge into property investment.
0 comments:
Post a Comment