Investment in the real estate sector is a safe and viable option for many who are looking to earn maximum dividends on their investment. However, the returns on real estate investment are not easy as it seems, the lucrative nature of the business only benefits those individuals whose decision-making is based on a holistic analysis of the real estate scenario. It has been observed that people only see one side of the picture and dive into the sector for investment without doing proper work and suffer losses.
For the benefit of investors, Graana.com brings forth the common mistakes that occur while investing in real estate so that they can be overcome in the future to gain maximum dividends on their investments.
Lack of Information Gathering
The foremost thing which most people do not take into consideration before investing in real estate is information gathering. Real estate has a broad spectrum of investment and one should not invest before doing proper homework. As a result of lack of information and research, most of the people land themselves in various issues for example investing in the housing schemes not approved by relevant authorities, making wrong decisions due to zero awareness about the by-laws of development authorities, and investing in projects that are built on vulnerable lands.
Undermining need for real estate experts
Being a one-man army is not the solution in every case especially when someone is about to invest in real estate. Not considering the services of real estate experts and professionals also put the investment of investors in jeopardy. The real estate professional has a complete understanding of the real estate market and has an in-depth understanding of legalities that can be encountered while making investments. Moreover, the real estate companies and advisors are accountable to the law-enforcement authorities which can make the investors confident in their investments.
Lack of Financial Management
One of the most significant tenets of real estate investment is financial management. It has been observed that while investing in real estate people do not keep a track of their finances and exhaust all of their financial resources in the beginning. These types of cases are encountered at a time when the real estate market is suffering from a price bubble, in other words, inflation. Lack of patience and urgency in investment thus land people in difficult situations thus paying more than worth.
Similarly, in the case of a purchased immovable property in the form of a house, apartment or flat many investors undermine the cost of structural repairs and they have gassed out all of their financial resources on the initial purchase thus once again landing in a difficult situation.
Overlooking Natural Factors
Climate change is happening and its impacts have started to surface. It may sound off the track but climate change has also an impact on the real estate market and the properties. Will an investor be interested in buying a property that sits on the verge of flooding or the land is prone to natural disaster? At this point, the phenomenon of Value for Money kicks in which is not only about getting a commodity at a reasonable price rather the quality and sustainability is also to be kept in mind while purchasing a property.
Sidelining Legal Aspects
Legalities can put the investments and savings of an investor in jeopardy therefore, legal aspects of properties whether residential or commercial should be thoroughly reviewed before pooling in the money. Legalities ranging from authorization of land by an authority disputed and encroached lands, and approved housing societies by governments should be kept in mind before investing in the real estate sector.
Similarly, various legal aspects pertaining to the paperwork are also relegated by many investors which can create hurdles in investment.
In real estate, location has a direct relation with the returns on investment. If a property is located in a vicinity that gives access to all the basic amenities then returns on the investment will be higher. This factor doesn’t seem to be significant but its significance kicks in once the money has been invested.
Investing in Commercial or Residential Properties
This confusing question brings many investors to crossroads since they are not decisive enough to invest in commercial or residential property. The reason this factor has been enlisted here is that investors cannot channelise their finances properly while making this decision. The requirements of commercial properties are different from residential properties moreover, commercial properties take some time in attracting future customers therefore, an investor should have an insight into both types before investing.