Ask around and any real estate investor can give you the dos and don’ts you need to remember while investing. While these are helpful tips and can guide you towards smart decisions, they don’t work for everyone. Every property deal is different. The property you buy can turn out to be virtually problem-free or end up presenting a new challenge at every turn.
So, there are certain points, that if kept in mind while buying a property, can reduce the risk of making a bad investment decision. You can be more confident about your decision if you follow these principles.
Expect the Unexpected
- One thing that every real estate investor must expect are the unexpected operating expenses. No matter how prepared you are or how much research you have done, there is a good chance you won’t be able to see these expenses before they arise.
- So to avoid being blindsided by these costs, the correct move is to look at the financials for a few comparable properties and compare those against the property you are considering. The only way to be ready for unexpected costs is to be intimately familiar with the typical operating expenses of places with similar characteristics in the market.
Be Aware of Your Exits
- Real estate is all about strategy and smart decisions. Any experienced investor knows that having long term investment plans and figuring out every detail of these plans before closing the deal is the correct way to stay in the game.
- Instead of relying on luck or depending upon future ifs and buts, you have to have a plan of action for your property. You need to figure out what you want to do with it - fix it, and flip it for a profit, or refinance it and hold it for cash flow, etc. Having a clear plan is the best way to ensure a good return on investment.
Buy on Facts, NOT Emotions
- The minute you think you’ve found your desired property at the first glance, that is right when you have to put a halt to your emotions and let logic take the front seat. It’s quite common to ignore the shortcomings of a property once you’ve convinced yourself that this is the one.
- So, if you feel your emotions getting involved in the deal, make sure you work extra hard on collecting facts. Do your due diligence, inspect the property, and use actual, historical operating data for your analysis. This will ensure that the deal not only speaks to your heart but also your mind.
A real estate investment is a process involving a lot of decision making. While we can always prepare for things we know are a part of that process, some unsaid rules or advisories are necessary to be followed while going through with the investment.
Such understandings come from experience and for a new buyer, it is something that comes up short. So having professional help for making these decisions for you and steering you away from making wrong choices, is a necessary to compensate for the lack of experience. We at Blockrise, provide this guidance that you surely need.
"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." - George Soros