Real Estate: 5 Mistakes Investors Should Avoid

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    We all dream to own a home, it can be flat or an already built home as these are considered as one of the best assets.

    Investment in real estate can give better returns when considered for long term. However, one should consider the boom and bubble in the real estate while investing.

    Investing in real estate can be as risky as the amount involved is huge.

    Real Estate: 5 Mistakes Investors Should Avoid

    Finalizing the property merely on the basis of looks can be dangerous. Here are few mistakes one can avoid while making a property decisions.

    Also read: What is Real Estate Investment Trust (REITs)?

    1) Not exploring the subject

    Failing to understand the basic concept of real estate investing can be a problem. Your research should depend on the type of investment such as buying property for self or for business.

    Before jumping to conclusion one needs to go through complete due diligence about the property owner, surrounding of the property or regarding any legal dispute.

    Also read: Real Estate Bill: How Home Buyers Will Benefit from it?

    2) Choosing the right finance

    Your bank and financier plays a vital role in the real estate as they will be part of it till you complete your full payments.

    Once you decide on the property, down payment, loan amount and interest rate will be an important aspect to consider.

    Choosing the right finance for your property is very important as your interest rates and other banking transaction will depend on that. Take time to decide whether you want to go for fixed or negotiable interest rates. Understand how the EMI is calculated and other aspects which are related.

    3) Not planning with a budget

    Do not underestimate the power of expenses as it could escalate anytime. If it is not planned you will end up paying way beyond budget.

    4) Paying too much

    This may happen when you fall in love with the property and fail to negotiate for the right amount.

    Overbidding with the fear of losing will have impact on the cash flows and future EMIs. If the debt burden increases you will have to comprise on other facilities and needs.

    Home buyers, need to take extra effort on deciding the property amount, can hire engineer for the estimation of the home.

    5) Believing the commercials

    We often come across, attractive holdings, paper adds, and TV commercials stating attractive prices and huge discounts. Do not fall for such preys. Do your homework, understand what they are offering and compare with the competitor neighbour price.

    Conclusion

    Investing in real estate is not a easy job unless you educate yourself. One should be sure of the future cash flows as it impacts in the EMI payment of the property.

    Real estate investing can be fruitful if complete due deligence and proper planning is done on the property

    GoodReturns.in

    Read more about: real estate
    Story first published: Monday, May 4, 2015, 11:06 [IST]
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