There are a number of things that a first time investor can miss when they are looking to buy their first property. Here are a few tips, that gives you a general guideline as to what to look out for when you start investing.
Having No Strategy
People often don't give the time and the effort that investing requires. They dive into deals that seem to look good without doing the necessary research and evaluation. People need to understand the certain strategies that can be placed with property. Whether they are going for a buy and hold strategy or a buy and sell one. They need to know what balance they need to find between growth and stability. Whether its best for them to positive, negative gear or neutrally gear. All of this of course depends on your current situation and is the reason why its best to know what strategy will best suit you. The thing is that most people neglect this part and then wonder why they end up in a worse position then when they started. By setting up a strategy you don't fall into the trap of painting yourself into a corner or only having one plan of attack. You are more able to prepare for when something doesn't go to plan.
Being Emotional Rather Than Analytical
Investing especially with property can be an emotional process for people and this gets them to make bad and irrational investment decisions. If you want to be emotional, then be emotional about the deal and not so much the house. Being too emotional can lead to paying too much for a property, selecting the wrong one and over capitalizing in renovations. To counter this its always best to know what you are looking for, have a walk away price and stick to it!
Not Taking Investing Seriously
If you are a guy,let me ask you how long you would spend looking for a $40 000 car? How much research would you do? I would say at least 2 weeks right?N girls, let me ask you. How much time would you spend looking for a $1000 dress? I reckon at least a couple of weekends right?!Now let me ask you this questions on average how long does a person spend researching an investment property worth at least $400 000.Well if we were speaking relatively, it would be 10 times longer than the amount of time looking for a car right?Who do you know that spends a minimum of 20 weeks researching on their investment property? Well if you want the good news now, then don't need 20 weeks of research to make a good investment decision. But you should apply the same amount of importance and research on your investment property as you would a car or a dress at least.
Attempting To Do Everything Yourself
For some reason people assume that investing will involve you having to do everything yourself. With property its all about building relationships with the right people. In terms of getting a good deal its good to build strong relationships with the real estate agents, home inspectors, lenders and appraisers. In terms of re-modeling and maintenance you want to get to know the contractors, roofers and electricians well. Its also a good thing to know how to outsource. There is always a balance between your time and the money being spent. Sometimes your time is better spend managing other people rather than doing something yourself.
More tips coming in the next couple of days
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