9 Common Mistakes to Avoid While Investing in Real Estate

Diversification and variety are key in life, be it in our personal sphere or our investments. Keeping all the eggs in one basket can have disastrous results at times, which makes it even more important to have multiple investment options. Real estate is a popular option among a number of people today, thanks primarily due to the safety and high returns on offer, but it is often seen that investors make blunders while investing, blunders which can have a harsh impact on their income in the future.

Real Estate Boom

Land has always been important in the Indian way of life, be it for farming or for establishing settlements. Today, the booming population has put additional burden on available resources, including land, and people are converting every inch of available land into sustainable dwellings. Big cities have witnessed an economic boom, leading to wealth but shortage of real estate, making investments in them a very smart move. With the price of real estate skyrocketing, purchasing even a small flat or apartment can lead to huge returns in the future. Not only do real estate investments offer high growth opportunities, they also provide immediate financial assistance, either in the form of rent or lease.

Land and real estate is perhaps the only investment which is guaranteed to appreciate over time, with it being very rare for land prices to depreciate. This makes real estate even more attractive and alluring, attracting people from all backgrounds to invest in it.

Common Errors Made By Real Estate Investors

A majority of people who invest in real estate do so for personal reasons, to have security in the form of a home, with only a certain section of the population purchasing real estate for the sole purpose of investment. Given the terms and factors associated with such investments, there is a possibility for both new and seasoned investors to commit mistakes. Listed below are some of the common mistakes associated with real estate investments.

  1. Rushing The Deal – One very popular error when it comes to real estate is jumping the gun. While it is understandable that investors are in a hurry to sign the dotted line, rushing it can have its own consequences. Staying calm and patient while executing a deal is of utmost importance as this added time can help you uncover a better deal or find more relevant information regarding a property.

  2. Ignoring Paperwork – We often come across multiple cases wherein people are cheated off their property by giving them fake documents. Documentation is perhaps THE Most Important factor to consider while buying a property. There is a possibility for people to ignore documents, failing to read the contract in its entirety, which could result in them losing both their money and the property. Scrutinizing the documents to check if they are legitimate and up to date must be made a habit before buying a property.

  3. Failing To Research – Research is key to every good deal and a lot of us buy a property without sufficient research. Failure to do this can dilute your investment, for you could discover aspects which can bring down the value of the property, or even worse, lead to it being a dead investment. Research on every aspect of the property, including previous ownership, building type, history of builder, etc. are crucial for a good investment.

  4. Underestimating Costs – The main purpose of investing in real estate is to make profits, but there are instances where people put their money without calculating the costs. Underestimating the costs related to developing, converting or constructing real estate can land you in trouble. Taxes, government fees and registration charges associated with a property should also be kept in mind before you buy that property.

  5. High Expectations – We all wish to make the most money out of our investments, but harbouring dreams which are too far-fetched can lead to disappointment. Investors should have realistic expectations when they buy real estate, for having unexpectedly high expectations can see you ignoring other investment options, relying solely on real estate, which could be a mistake in the future.

  6. Overlook Small Details – Buying real estate can be a long and tedious affair, involving a lot of paperwork. It is possible to skip certain details in a bid to fast-track the investment process. Overlooking small details in the contract can have disastrous consequences, with builders often having certain clauses, which could lead to long drawn legal hassles in the future. It is best to have an expert look at the contract before signing it.

  7. Not Factoring Risks – Real estate investments are typically viewed as safe, but there are certain risk factors associated with it. Ignoring the risk involved and purchasing a property isn’t the best investment move, and one should always factor in risks before they sign the dotted line.

  8. Blindly Trusting Others – A number of people who purchase property are first timers, who often rely on the word of others when they invest. Blindly trusting a third party while investing can be extremely stupid, for people are bound to do things in their best interest. Blind faith can lead to you spending more than what is necessary or purchasing real estate which doesn’t suit your requirements. One should consult experts in order to get a clear picture and rely on the word of those who have a proven record of offering good deals.

  9. Mistiming The Deal – Timing is key to everything in life and a real estate deal is no different. Most builders offer sales on their products and waiting for them could see you get a better deal on your investment. The demand and supply situation in a particular location also has an impact on prices and it is crucial that one times the deal perfectly to make the most of it.

Committing mistakes is part of human nature, and while we cannot completely wipe out mistakes, we can learn from them. Remembering a few simple points can ensure that your real estate investment doesn’t become one of the biggest mistakes of your life.

Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

This Page is BLOCKED as it is using Iframes.