Top Ten Real Estate Investor Mistakes

A Story by Jennifer Jacobs | Updated 09/19/2018 4:44pm


Like any game of sport, investment in real estate requires acumen that makes deals successful in a prudent sense. The development of this investor aptitude requires one to be vigilant at all times. Even the most experienced and professional investors fail recognize the mistakes. One needs to be aware of all the potential wrongs that he/she may commit. In order to help you avoid financial blunders in real estate and sign major deals at your disposal, here is a list of major mistakes that an investor makes:

  1. Failing to clearly state the deal

About 80 percent of the real estate deals failures are because of inconspicuous nature of the deal. A party may not clearly state the terms and conditions at the time of the deal which may lead to miscommunication. This can be dealt easily by penciling down the deal properly to facilitate efficient communication.

       2. Stating the deal using unreal figures

Many investors resort to the usage of fictitious figures or numbers to state their sources of revenue to the other party. This may lead to a domino effect at a later stage making the entire deal to collapse.

  1. Wrong renovation estimates

Most buyers don’t consider the market prices of the commodities which are to be used for renovation; rather they resort to imaginary fantasies. A person may draw up the estimate to $30000 whereas post the bidding it may turn out to be $80000.This is not just disappointing but can also land the buyer into bankruptcy.

  1. Underestimating the renovation time

Investors, especially the amateur ones tend to underestimate the total time period of renovation. In this sense, it is better to take advice of an experienced investor in that particular area of real estate investment.

  1. Making false assumptions

False assumptions relating to the cost of renovation material or the cost of getting any additions done may prove to be detrimental to the deal itself. In reality, items tend to usually cost more than the presumed cost. It’s always advisable to keep the estimates well beyond the potential amount.

  1. Considering Real estate investment to be comparable to other forms of investment

Real estate investment in its essence is a unique form of investment. It cannot be compared to investment in stocks and bonds. Thinking that sitting at home one can generate returns through real estate is a false belief. One needs to be aware of all the potential stressors like maintenance cost, tenants and bills.

  1. Perceiving real estate investment to be a cake walk

Real estate investment works at a lot of levels ranging from proper communication and offer to the signing of the deal. So, thinking it to be easy is just going to make things harder.

  1. Switching hands is investment

The myth of swapping properties creates a pseudo self fulfilment for the investors. Ironically, they lose money doing this.

  1. Real Estate is low risk

The risk in real estate is quite high. On one hand, it could turn a person into a billionaire, and on the other hand could prove to be financially painful for him. So, beware!

  1. Blindly believing Real Estate ‘pundits’

One should not always listen to whatever the self-proclaimed gurus have to say. Smart sense of selecting the right advice is required here.

 

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