Yes, if you make a mistake in real estate investment, it will not only cause losses but also affect your mood and personal life. Therefore, avoiding mistakes to achieve a wealthy investment is to be happy, otherwise, what is the point of investing?
The five common mistakes in the previous article tell you that if you want to invest, you must be serious about managing real estate as a business and don’t be careless when it comes to decision making. Now, let’s study how to avoid the other five mistakes, how to buy a house smartly, and how to operate to earn more.
Overly renovated and unnecessary expenses
Houses need to be properly renovated to get a good price. However, that doesn’t mean you need to break the bank to over renovate your property, and sometimes, overly renovated houses do not sell for a great price too. Some people take the facade too seriously and make it the important buying or selling point, and the renovation cost may even exceed the housing price, but the housing price has not risen because of other factors such as the environment, the location, the tenure, and many more.
Investors who know how to budget and analyze spending can avoid unnecessary waste and increase net profit. Some friends bought a terrace house worth MYR300,000 but used another MYR300,000 to renovate. But they have forgotten that they are only buying this property for investment, not for their own stay. When problems like this arise, it’s mainly because investors don’t understand how to budget from a business perspective.
Remember! Generally, buyers in the second-hand market are only willing to purchase the relevant renovated property at a lowered price of 20%-40%. Therefore, from the perspective of investment, avoiding unnecessary expenses is one of the principles of successful investment. When you buy a house, you must plan carefully of every penny you spend.
Determine the investment purpose and target when buying a property
In reality, there are really many homebuyers who don’t know why they want to buy a house, or even what kind of house they bought, such a person is very likely to buy the wrong house. These people are the kind in the market where they are the “Hear-Say” people, They bought a house because they heard that their relatives and friends say it is good, they buy a house only because the market says that it is good, and they are the group that has most of the failures when it comes to property purchase.
Can’t make an investment without money?
Many people want to invest in real estate, but many don’t know that investing in real estate does not require too much cash. Therefore, many people listened to the lectures of property professionals, shared a retirement dream and after that, they cease to take action. Investment is definitely not the exclusive domain of the rich. Using the convenience of financing, the supporting facilities of the developer, and the space of the market price, most of the houses we buy do not need too much cash or even a penny of our own. This is not fiction, it is true there are countless examples, you would hear the professionals say that they spend very little on a few investments but gain more capital than what they spent.
The first step in investing is to know your financial situation, and then set up a long-term financial and investment plan. Investors must know how to negotiate with the bank, and more importantly, be friends with the bank, persuade it to be your “backup”, so that you are not afraid that you can’t buy a house without money.
Cheap houses are not necessarily the best
Many people think that buying the cheapest house can make the highest profit. In fact, it is completely wrong, investors who make a lot of money are smart investors who “don’t buy if the price is not high”.
The industry that is truly worth investing in is not the cheapest, but the “most potential” one. We should not care how much money the seller makes, but only how much we can make after buying it. Some people buy a house only to see the seller lose a lot of money before they make the purchase, it is often difficult to increase the price of cheaper houses, but the higher prices continue to rise.
Before buying a house, it is necessary to plan and research clearly, it is very difficult to understand the value-added space and leasing potential of the industry; but it is absolutely necessary. Successful investors will never pick up the bargain, because even if the cheapest industry does not look promising in the future, it is just a waste of money.
Negligence in property management
The biggest mistake made by real estate investors in our country is that they don’t know how to manage and increase the value of the property after the purchase, thinking that if they own a lot of houses, they will definitely be able to make revenue or profit from it. In fact, there are too many wealthy investors in the market who can’t make money. Successful investors treat each investment as important as their children, they will manage the property as if they live there themselves, they will even dress proper and make sure the house is in good shape when they are looking for potential buyers, they also know how to find a good tenant and use rent to increase the price of the house.
The above is not only happening to “new people” in the industry. Many investors who have purchased several properties may have also made the above mistakes. Investment attitude determines your future, taking your investment seriously will reduce risks and increase profits for you. No matter how much you have lost in the past, remember and avoid the above mistakes from now on. Correcting your attitude will promise you a better future.