Buying into the property market as an investment is not without its risks. Although it can be a very profitable venture, if you are not fully informed and aware of potential pitfalls property investment can soon result in costly mistakes.
Not only will you have wasted time, there is often plenty of money involved. Read on for advice on how to avoid common property investment pitfalls.
Understand All Risks Involved
There is always an element of risk with any property investment – nothing is ever set in stone. However, manage said risk through careful analysis, assessment and research. Risk assessment and adequate research go hand-in-hand. In-depth research and doing your due diligence will reveal what economic drivers impact your investment and potential returns.
Often, investors trip by rushing into deals without proper risk assessment. Often, only after a deal has been made, costly complications arise which can jeopardise your investment and return. Awareness of your own individual and organisation risk profile is also vital. Identify the level of risk you or your company is able and willing to accept. Should your investment not work out, is this going to jeopardise your entire investment portfolio?
Make informed decisions and don’t jump into something blindly.
Consider All Strategies
Before obtaining any property as an investment, have a carefully laid-out plan. Do not only consider scenarios where your investment works out, but also have strategies for those moments where it might be financially beneficial to move on from your initial investment.
Exit strategies are just as important as entry strategies. Review your strategy when required to ensure your investment is profitable and meet your financial targets. A common mistake for investors is not having a documented strategy and plan. This can result in errors, miscalculation of expected profit and unrealistic financial targets.
By meticulously documenting your various strategies, you are safeguarding your investment and future financial gain.
Engage a Team of Experts
Free advice is not per definition good advice, especially when it involves investing in property. Whether you are a seasoned investor or only just breaking into the property market, engage a team of experts for solid legal and financial advice.
Ensure you speak to more people than just real estate agents whose only end goal is a sale. Navigating investments can be confusing, so be sure you speak to property investment experts that can advise you along the way.
Property investment experts can not only help you maximise your investment, they can also inform you of tax and other matters. This is especially critical when breaking into a new region or an international market.
Consider the Market You are in
Not all real estate investments or transactions are born equal, there’s a big difference between personal and corporate real estate. Ensuring you know where you stand is critical to success.
Corporate real estate investments are particularly complex by nature as a high volume of money and value is passing through multiple hands. There can be pitfalls and snags along the way, so it’s important that you are aware of what to expect and how to handle what comes your way. This is why so many bigtime investors tend to seek the legal counsel of corporate law firms. Having a legal team on board tends to make the entire process smoother.
When it comes to personal investment into real estate, you may not require a law firm, however, having an expert on real estate transactions to consult is very valuable. Not only does this save you on sometimes costly mistakes, it also reduces the fuss that can come with the entire process. From giving you advice on what the most lucrative choices you can make are to making sure all t’s are crossed and I’s dotted – these people exist for a reason, to help you do well in the real estate market you find yourself in.
Avoid These Common Pitfalls with a Solid Plan
The main takeaway from this is that having a strong plan in place from the beginning is what will result in success in the real estate industry. Also, seek help from the appropriate sources when you need to, and you’ll soon be looking back on a profitable venture in real estate.
Author Bio: James Moore is a business and real-estate consultant who writes on a range of topics, including real estate, finances, and business.