Buying real estate is a big investment, and maximum attention should be given to the particulars and details of the deal to ensure that you are not getting the short end of the stick. Since the investment is so huge, there are many pitfalls that a person can fall into. Avoiding real estate pitfalls is imperative to keep your investment safe and to ensure that wherever you invest your hard-earned money, you get a good return out of it. Let’s look at some common real estate pitfalls and how they can be avoided for maximum fiscal security.
Now, several of these pitfalls or mistakes are common because they are prevalent in the market. As such, there is always this urgency in following the market, which can be very counterproductive to your investment. Not every trend needs to be followed, and paying attention to the details is the best way to start your real estate investment.
Let’s look at some common mistakes and how to avoid real estate pitfalls to ensure a successful investment.
Common real estate pitfalls
Even if you are not new to the real estate market, it is still important to know about these pitfalls and avoid them as much as possible. Let’s take a look at it.
Planning is key: take it from authority that if you fail to plan, you planned to fail. It’s as simple as that. Understand one thing: if you have a plan on what property to purchase or invest in, and how it will generate income, you will never encounter such pitfalls. One of the most common sins of real estate investment is insufficient planning; it’s easy to just plunk down the cash when there is a buying frenzy going on. The property that you think is the best will then turn out to be just a dud; there is no worse feeling than that. So, plan first: take some time out to research what the market shows, what the demand is, where the gap in supply exists and try to corner the market in a way that is the most financially beneficial for your investment. Then, you will have avoided one of the most common and devastating pitfalls of real estate.
No market research
Planning will obviously include research, and the better the research is, the better your real estate investment will fare. Again, it is easy to succumb to the ease of just following the market and investing whatever is new and hot; this begets the very important aspect of research, which is again, a pitfall that can be easily avoided and your investment saved. As stated beforehand, planning includes research: this entails in it a lot of things. Like understanding that a certain property, no matter how lucrative it might be, will not pay off much in the longer run, or cornering the market in an undiscovered place which might yield extremely lucrative long-term benefits. All of this comes with good research, and the more thorough your research is, the better you will be able to navigate around these pitfalls and avoid some of the most common real estate issues prevalent in the market.
Tackling the legal side by yourself
The real estate market is a tough business, and here, the more qualified experts you have with you, the better your chances of always thriving in such a competitive space. One of the most common problems that people often face with the real estate market is their reservations or reticence in acquiring the services of real estate lawyers or attorneys, who will help navigate the treacherous path of real estate with them. Doing everything on your own might sound heroic, but if you get involved in some paperwork or a visit to the court, you will understand the importance of having a good real estate attorney in your team. Not only will a real estate attorney protect your investment and your legal interests, but they will also help you in setting up deals, doing the due diligence and even advise you on real estate trends and which deal to pursue. Think of the real estate attorney as your business partner minus the ostentatious costs.
Predatory financing/ lending
One of the most dangerous and debilitating aspects of the real estate market and investment is the predatory financing or lending that is so common within this sector. Many banks and other lending agencies will offer usurious rates on mortgages, and while, on paper, the deal might seem like something that is palatable, it usually isn’t. And since many investors and other newcomers in the real estate market are in a hurry to purchase and get their hands on the next big thing, they eventually and inevitably end up signing on a financing deal that is not very feasible and might hurt their investment in the longer run. Couple this predatory financing with zero research and minimal planning and you can understand why the real estate market can be such a volatile and unpredictable sector. However, do your research and due diligence and you won’t have any of these problems. It is also imperative to mention here that a real estate attorney will help you negotiate a better deal and will always advise you on what deal to take and what to exclude.
Failing to understand the monetary requirements
Real estate is not a one-time purchase that you pay for and start earning money on top of immediately. It does not work like that, and many newcomers and even some seasoned individuals within the real estate market tend to become victims of these pitfalls. It’s not a pump-and-dump scheme, it’s real estate. It is important to understand that before you may be able to earn from it, you will need to spend on the property, making it feasible for tenants to move in. Unfortunately, as simple as this concept is, a lot of people have a hard time coming to terms with it. So, the advice here is to not blow off all the investment on buying up a property; instead, keep some for a rainy day and ensure that you have enough left over for a repaint, reupholstering the interior, or whatever the requirement from the tenant might be.
Property management issues
The main goal of a real estate investment is to obviously generate income from it. Income that will then pay off the mortgage or keep you afloat in the real estate market. Once you have your tenants and your real estate is generating income, one of the most common pitfalls that are seen, even with big real estate moguls and developers, is shoddy property management. Everything from not listening to the tenants to ignoring upkeep and maintenance complaints all constitute property management issues, and it is the fastest way to tank your real estate investment. It is common because too many investors and newcomers focus on the returns and not the actual property and the tenants itself. Which makes it an unsustainable operation and eventually, leads to the property becoming a liability rather than an asset. Avoid this common pitfall and you will have absolutely no troubles at all.
Not having a backup plan
Things go bad. That is the one rule of life that is always constant. Real estate is no different; things go wrong there all the time. Sometimes legal matters may stop a process, sometimes some other unforeseen issues come up which might put a stop to your plans. Just as much the planning phase is emphasized, having a backup plan or a fallback plan is equally important to not lose sight of what is more important. Having a backup plan does not mean that you have essentially gotten out of real estate, but it is a plan that will help put you back on track once the situation turns favourable.
Siddiqui Law: for sound real estate law advice
When it comes to real estate, the stakes are too high. Your hard-earned investment needs to go to a place where the returns will be lucrative. However, in doing so, you will need the best and most sound legal advice that you can have, and Siddiqui Law Office is here to help you. With an extensive experience in real estate under their belts, Siddiqui Law Office provides excellent services that encompass each and every aspect of real estate: whether it’s buying or selling, renting or mortgage, Siddiqui Law has it all. Aside from this, for legal advice that keeps your financial and legal interests secured, they also provide bonafide services for,
- Purchase and sale of residential properties
- Refinancing private mortgages
- Transfer of title
- Power of sale transactions and proceedings
Give your real estate investment journey a big boost and keep your legal and financial interests secured with Siddiqui Law Office. Complete with the best possible team of real estate attorneys, an extensive experience and a track record of excellence, Siddiqui Law is your partner for smooth sailing onwards.