Introduction
According to Mark Roemer Oakland, real estate is a great sector for investing your money. However, people often lose a lot of cash due to some common mistakes. Let’s check out a few common mistakes that should be prevented while investing in real estate.
The Errors
- Not making a plan – Irrespective of the investment opportunity, you should always go forward with a plan. You don’t’ want to buy a home without knowing how it will earn you money. Similar to the stock market, the real estate market also has buying frenzies, and it’s easy to lose reason during such events.
However, it’s important to calm yourself and have an exit strategy. You need to have fail-safes and backup plans. Figure out what you’ll do with the property if your assumptions are wrong and the market sours. You need to have a plan for recovering a major fraction of your investment so that you aren’t financially ruined.
- Skipping research – Most people do a lot of research before any purchase. Whether you’re buying a new phone or a new TV, you compare several models from different manufacturers, check out their specs, and compare them with each other to figure out the best deal for your money. Properties are big investments where you spend hundreds of thousands or even millions of dollars and that’s why they need a lot more research and due diligence.
Apart from inquiring about the property itself, you need to ask questions about its history, the neighborhood, and other such things. For instance, you can ask if the property is close to a commercial site where constructions are a common thing. Figure out what the city council has planned for that neighborhood. Check if the property is located in a zone that’s prone to flooding or other problems like termites.
- Overlooking tenant needs – If you plan to invest in a property for renting it out, you need to figure out your potential renters. Would your property cater to young families, singles, or college students? If you plan to rent out a property to young families, you need to buy a property in an area with low crime rates and good schools. On the other hand, singles prefer to rent homes in an area that has active nightlife and access to cheap mass transit. Buy properties that can satisfy the needs of your renters.
- Poor financing – This is a mistake you need to avoid at all costs. Don’t be lured by exotic mortgages. They are designed to entice you into buying properties that you wouldn’t even consider buying otherwise. Make sure to avoid interest-only loans since you’ll pay dearly when the interest rates are eventually raised. If you get a property with interest-only loans make sure that you have the financial might to pay it off when the installments go up.
Conclusion
Mark Roemer Oakland suggests that you prevent the above-mentioned mistakes while exploring real estate investments. Like any other investment, it’s important to do thorough research and have a sound plan when you put your money into properties.
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