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6 Deadly Real Estate Investing Mistakes

6 Deadly Real Estate Investing Mistakes

Investing in real estate is very profitable as it yields good returns. But many people lose money while investing in real estate as they have no experience or knowledge. If you are planning to invest in real estate then you should know the common mistakes. This blog describe the top 6 deadly real estate investing mistakes to avoid so that you can safeguard your investment.

No knowledge of market

Many real estate investors lose money due to the lack of market knowledge. It’s very important to know about the market situation before investing in real estate. The successful investors always buy property in a crashing market whereas sell in a booming market. This is because in booming market property prices are high and during crash property prices are low. So it is important to know about property market for investing.

No idea of hidden costs

Many people lose money while investing in real estate as they don’t know about the hidden costs. You should also know about the maintenance cost and taxes. These are the hidden costs that are required to maintain the property. The cost to buy a property is the price you pay to the seller plus the renovation cost. The hidden charges increase the purchase cost but reduce the profit margin.

Bad location

Like good location, there are bad property locations too. Bad location makes the property undesirable and people avoid buying or renting it. Bad location areas are those which have declining economy, high crime rate, high noise pollution and old infrastructure. You should never buy an investment property in these areas as chances are high that you will lose the money.

Bad property

Like bad locations there are bad properties too. A property which is in poor condition is the bad property. Properties which have no modern layout plans or trendy finishes & fixtures are also undesirable. Similarly, very large property is also not ideal for investment as very few people can afford to buy or rent it. Therefore avoid buying the bad property otherwise you will sustain huge losses.

Joint investment

Many people invest in real estate as joint venture or in partnership. Joint ventures do happen but always write down the agreements. When there is no written agreement, disputes arise in sharing of cost and profit. Therefore, it’s always recommended to write down agreement if you are investing in partnership. But ideally it’s always better to avoid the joint ventures while investing in real estate.

Get rich quick mindset

Another fatal mistake by real estate investors is the get rich soon mindset. You should know that real estate investment definitely yields profits but only if you have invested for long time period. Many people, who have invested for few months, mostly lose their money. You should invest for at least four to five years to get good returns. So always invest for long time period while avoiding the get rich quick schemes.

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2 Comments

  1. Farooq Lari

    on   said 

    Salam Malik sb.
    Still waiting for the price dip to happen to make my move either in Lake City or Bahria Town. I have few questions and seek your expert advice

    Q1: Do you reckon I can get a 10 marla plot in around Rs.55 lacs if i wait till February 2019 in these 2 societies?

    Q2: If i seek bank loan for buying plot, it can only be on sale deed / land registry plots. Is Lake City and Bahria Town on the approved list of banks?

    Q3: Seeking your guidance to invest little amount on a genuine housing scheme either on Chakri Road and Adyala Road in Rawalpindi due to the Ring Road factor. Please provide some genuine names.

    Thanks and Regards

    Reply
    • Farooq Lari
      Bank loan available for Lake City but not for Bahria Town as most phases are not approved from LDA. Another thing to consider is that interest rate is very high in Pakistan so don’t buy property with bank loan as loan repayment will increase in the future. High chances that bank interest rates will increase to 14/15%.
      According to the current situation I don’t recommend buying any property. Firstly prices are falling secondly NAYA PAKISTAN HOUSING PROGRAM will be launched on 1 January 2019 and that will further decrease the prices.
      Best option is to wait the market for couple of months.

      Reply

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