Are you looking to step into the investment game of real estate? There’s a lot that needs to be taken into account, so don’t expect to become an expert overnight. There is an opportunity of making money when buying and selling property, but it all comes down to knowledge, understanding, and skill.
The most important key point that investors seem to overlook is having expert, qualified help, and advice to guide them on the right path to know whether real estate is the right investment for them.
Below is a breakdown of the classic mistakes made when starting an investment journey and why choosing a property valuation service. is the starting point of any successful property investment portfolio.
Enjoying the insights here? We also have a detailed piece on how to evaluate a house which can further enhance your understanding.
No Set Plan
With any new idea or investment, the first thing you need to do is make a plan. You don’t just want to buy a house and not know how you are planning on generating a positive income from your purchase. Even if the property market is booming, it can be hard to resist diving in headfirst.
Always take a step back and re-evaluate why you want to invest in the property and the goals you wish to achieve. Plan accordingly. Keep in mind that before getting a mortgage or throwing all your savings into the property market, you need to decide on an investment strategy.
Ask yourself, what type of house are you looking for? Would you like to invest in a single or multi-family dwelling, commercial, vacation rental or mixed-use property? Once you figure out your purchase plan and budget then that will narrow down to the property that would best suit your plan.
Insufficient Research
Before deciding on buying a new phone or tv, we all tend to compare a variety of models and ask questions to determine whether or not it’s worth the money. So, when it comes down to purchasing a property, research and due diligence should be extremely thorough and accurately done. Also, brush up on your investment terminology to give yourself an extra leg up.
Depending on the reason for your investment, whether it’s personal homeowning, renting or flipping, you need to consider the various research and knowledge needed for each type. Have a list of questions that you would ask regarding any property or area you are interested in:
- Are there any major developments or construction planned?
- Has the area been upgraded or are any plans expected for changes to household types?
- Is the property within a flood zone or prone to termites or rodents?
- Any renovations or replacements needed in the house?
- How much did the previous owner pay for the house and when was it purchased?
- Proximity to amenities such as shops, hospitals, and schools.
These are all important questions to ask the agent of the property. Most importantly a lot of these questions can be answered when you seek the services of a property valuation. You might think about doing it all yourself and it is a possibility with the right research. However, the process may not run as smoothly, especially in a down market, and without adequate, qualified help, you may not have anyone to turn to when a deal becomes unfavourable.
As an investor, you should take all opportunities to gain knowledge and experience as well as utilise every resource available. Such experts would be able to alert an investor of any flaws in the property as well as the neighbourhood.
Poor Financing
When buying property, you would need to have a mortgage approval. If you decide to go through a lender or a bank, it’s important that you find the right one who is best suited to your investment.
There are a large number of mortgage options for any purpose to allow buyers to get into the market and purchase a home they might not be able to afford, rather than a more conventional way of a 30-year mortgage.
This can result in buyers securing adjustable-rate mortgages or interest-only loans which leads to them eventually paying the price when interest rates rise.
Having the financial flexibility to make the repayments and having a backup plan to convert to a fixed-rate mortgage down the line can save you thousands in the future and will result in positive investment.
Overpaying
Having the right plan and investment strategy will set you in the right direction of what type of property is best suited to what you are looking for in an investment. We all know research can be time-consuming and frustrating.
Especially when trying to find a property that meets your needs and wants. We tend to dive headfirst and expect the seller to accept the bid. This at times can lead to a potential buyer overbidding on a property.
When you overbid this can have a negative impact and end in you getting into too much debt. It creates higher repayments you might not be able to afford. A pre-purchase property valuation is important before placing an offer on a property. The valuation report will break down similar properties’ saleable amounts giving you an idea of what the property’s asking price should fall under.
These common mistakes will have a big impact on your investment, and this could mean a positive or negative result. That is why doing the research and having the right team on your side will get you on the path to success. That is why a property valuation is an essential tool for any potential buyer, investor, or homeowner.
What Is a Property Valuation
A property valuation is a process in which the true value of a property is calculated. A valuer will take into account the local market, compare previous sales within the area, and collect all data. They analyse both present and historical aspects to get a bigger picture of the property and any changes that have occurred.
The valuer will complete an internal inspection of the property and note down all aspects and details of the property with regards to rooms, features and any defects or flaws that may have any impact on the final valuation. A comprehensive and detailed valuation report is unbiased and legally binding and will give you the true value of the property as well as how the property and surrounding area have evolved over the years.
By choosing an independent valuation company for your next investment you can rest assured that your best interests are taken into consideration and that the valuation is best suited to your purpose. A valuation report helps you make informed decisions for a successful investment.
