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5 Common mistakes to avoid in real estate investment

5 Common mistakes to avoid in real estate investment

Introduction: There was a time when saving was considered the ultimate financial goal. However, simply saving is no more beneficial especially when inflation eats into it. Financial goals vary from person to person. Some save for weddings whereas some savings for retirement. However, not only saving but investing can make the future secure and better. Also, regular investment brings a sense of discipline in the long run.

Investment types: Investment is mainly of two types; active and passive. The active investment includes equity investments whereas passive investment refers to the buy-and-hold strategy of investment. Though there are numerous investment options to choose from; in India, people are more inclined to direct equity, mutual funds, fixed deposits, recurring deposits, public provident funds. The most recently added to the list is the investment in real estate.

Real estate investment: Real estate investment is a comparatively new addition to the list of financial goals of the tax-paying population. With the booming population, scarcity of resources including land is quite evident. Rapid urbanization leading to wealth but creating crises in real estate. Hence, investment in real estate is considered a smart move because the price of real estate is skyrocketing. Purchase of apartments promising a huge return in the future. Real estate investment is not only apt for a secured future but also a good source of short-term income in the form of rent or lease. Real estate investment promises a guaranteed return because land prices hardly depreciate. However, both new and seasoned real estate investors can make mistakes when investing in real estate. Here are 5 common mistakes listed below that you can avoid while investing in real estate.

1. Intensive research: Research is the crux of any real estate investment. If you fail to research properly while buying a new home, then you are most likely to fall prey to bad deals. It can vary from property dispute to poor quality construction or the history of the builder.

2.Prior cost estimation: If you are planning to invest in real estate then cost estimation is a must because underestimating the same can lead you into trouble. For instance, while buying property, including the stamp duty, registration fee, and taxes to be paid to the government. 

3.Never overlook any risk factors: In any type of investment certain risks are associated with it. The same goes for real estate investment as well. So, ignoring them would be a poor decision that might harm you in the long run. 

4.Keep yourself away from high expectations: Though we wish to make the most out of the investment we made, expecting something big out of it can lead to disappointment. So don’t put all the eggs in the same basket. Instead, explore other options of investment other than real estate. 

5.Paperworks: Last but not least is the paperwork. Sometimes we ignore the paperwork, so read the contract in its entirety and scrutinize it to prevent any fraud in the future. 

Conclusion: Real estate investments certainly give good returns, but you have to be careful enough to rush without proper research. We have this natural tendency of making mistakes but at the same time, we can have guidance from the experts or consult people to crack the best investment property deal.Â