Today investments in real-estate business is regarded as one the most profitable investments. But at the same time it’s accompanied with equally bound financial risks, especially when an investor isn’t well versed with prevailing trends of real-estate market. So in case if you are considering investing your money in real estate business, then it is essential to avoid most common costly mistakes. By knowing these mistakes made by numerous investors, you can avoid them and ensure better returns on the investment.
Below is a list of most common mistakes committed by investors according to real-estate experts and professional involved with real estate market.
No proper planning: Lack of planning is one of big and costly mistakes made by the beginners or new investors. It is better to find a property after planning an investment strategy, but instead most of the investors would purchase a property because of its price and later try to fit it into their action plan.
Believe in truth and invest for long term profit: Most of investors conceive that it’s easy to earn profits in the real estate business. But in fact this is just a myth and truth is that real-estate investment is a long term plan.
Doing real-estate business single-hand: Today the investors don’t want to build a team, instead they want to do everything single hand. On the other hand to run a profitable real estate business an investor should have real-estate agent, home inspector, appraises, lender and closing attorney for assistance.
Excess payment: This is another reason why investors fail to earn profits. In these cases the investors would investment or pay excess amount on a property for purchase. By investing extra money on a property, an investor will be left with no money for redemption.
Miscalculation of money flow: Majority of the investors whose basis policy is to purchase, hold and then rent out real estate property to generate enough cash for maintenance. The investors never allocate their funds to meet expenses like mortgage tax, advertising cost and insurance. As a result an investor’s asset would be turned into liability.