Four mistakes you must avoid in real estate investment.

Hello,

I know it is that time of the year when we begin to take stock of our goals; those achieved and those yet to be achieved. The good news is that there is still time to accomplish so much more. So, if real estate investment is one of your goals this year, do not rush into it just to meet a timeline.

 Please take note of the following errors to avoid when investing:

#1.  Excluding experts from real estate transactions:
Property transactions require the services of certain professionals like lawyers, realtors, and surveyors. Some investors fail to engage such professionals when acquiring properties in order to avoid paying professional fees, while others engage quacks for lower fees.
Experts can help you perfect your original estimates and plans. They also help you understand or bring to your attention some issues that you might not be aware of due to your limited knowledge of real estate transactions or ignorance of the neighborhood where your intended purchase is located. 

Discussions with realtors can help you learn more about the value of the property you intend to buy and the value of surrounding properties. Legal practitioners can help you conduct searches on the title of the proposed property. They can also help you understand the implications of the title of the proposed property, additional fees to be paid, and the processes that the property might require. Therefore, never underestimate the advice of a professional who is familiar with the market in order to avoid future regrets.

#2. Poor Planning

Before buying a property, it is critical to have a financial plan and a goal. Setting financial boundaries by establishing how much you can afford to invest is advisable to keep you from taking on financial obligations that are well above your capacity. You should take your time estimating the total cost of the purchase, taking into account all associated fees such as those for documentation, title perfection, survey plans, and development. Never purchase a house without learning about the supplemental fees and making every effort to negotiate them. 

It is also important to ascertain the purpose of your purchase which may be either for personal use or as an additional source of income. If you are buying for passive income, avoid focusing on just your projected returns. The total cost of purchasing and maintaining a property will determine whether or not a real estate investment is profitable. So, kindly consider the cost of maintaining the property beforehand as inability to fund the maintenance of a property after purchase can drastically reduce the value of the property in the event you want to resell it.  Finally, decide how you will finance the investment before committing to the purchase of a house or land. If you plan to finance your project with a loan, make sure you review the interest rates before signing the loan Agreement.

#3.  Lack of due diligence

Due diligence entails running detailed background checks on properties you wish to purchase. Carrying out Due Diligence does not connote lack of trust, so no matter your relationship with the vendor of a property you wish to buy, do not omit due diligence. For registered properties or properties with Certificate of Occupancy, a search at the relevant land registry is advisable. 

Also, ensure that you go for a physical inspection of the property you want to buy in order to ascertain what the property is like, what the area around the property is like, and what the future of the neighborhood might be like. For example, is the property or its location at risk for flooding? If it is impossible for you to conduct the physical investigation yourself, maybe due to distance, ensure that you have a trusted friend or relative do the physical investigation for you. While they are there, you can request a live video call to enable you to see the property. 

Avoid urgent purchases. Take your time to investigate the property and verify the title. Doing your due diligence also helps ensure the property is a perfect choice for your purpose of investment. If you are dealing with an agent or property company, you should investigate the credibility of the agent or property company. Buying land or a home from a reputable brand could be an assurance that you will be getting a good title to your property. Always do your due diligence before signing any cheque, or parting with money.  

#4.  Emotional Purchase

Avoid making investment decisions based on emotions as it could cause you to make financial errors. It is possible to become emotionally attached to a specific piece of property or building. However, take care to avoid overlooking problems that the property might have or overpaying for it due to your emotional bias. Avoid buying a property solely because of the influence of a family member or friend, and do not succumb to the pressure of property agents. Ensure that your purchase meets your investment goal.