In the quest to be financially free, one is faced with a number of investment opportunities and of course, it can get very tricky. You reading this article, you are probably a prospective Real Estate investor, curious to know the mistakes other investors make so you can avoid them. Real Estate Investment is undeniably profitable and many successful people are real estate investors. It’s exciting news just reading about the mouthwatering opportunities Real Estate has to offer. For some people, the thrill of becoming a landlord can simply not be replaced.
The Real Estate sector in Nigeria stabilized itself in 2019 and projections have been made for the future of Real estate in Nigeria. It is obvious that this sector is back with broader opportunities and smart investors are wasting no time diving right in! With the Real estate market booming, there is no better place to invest your money in 2020.
The safety and high returns on investment make Real Estate investment forever attractive. There are, however, investors who end up making very costly mistakes because they heard of an opportunity and jumped right into it without ticking some major boxes. I will tell you that just like most things in life, there are processes to pass through! Before you get stuck on the thought of making so much money, think about making sure things don’t go south. As an investor, you must understand that you are going into something that obviously has its risks and so you must be prepared to take on some challenges before reaping the bountiful rewards that come with Real Estate investing!
We have come up with five mistakes investors make while investing in Real Estate! Let’s look at them carefully and avoid them!
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- NO PLAN OR STRATEGY
“If you fail to plan, you plan to fail”. It is a famous saying very much ignored by many investors. They are most times carried away, and they fail to set out their investment plan and carve out strategies that will get them the desired results. They simply move emotionally. This will eventually end badly.
Your investment process must start with a very tangible goal. What do you want to get at the end of the investment process? Are you investing to start another business or perhaps you are looking to retire? How long do you want to invest? Is it short-term or long-term?
You must also make cash flow projections and analyze your budget as well. Carve out custom-made investment strategies that take into consideration your financial plan. Separate your emotions from your objectives. Carefully set out your goals and strategies and follow through with them. It’s easy to jump into opportunities when the market is hot. Don’t get caught up in the frenzy.
- NO RESEARCH
The more you know the better. Ignorance is never bliss when it comes to Real Estate Investing. Not knowing enough is what has led to average returns or dead investments for some investors. It is tempting to assume that you unconsciously understand Real Estate Investing. This can prove catastrophic. Do your homework. Ask questions. Meet the experts. Make sure you understand the intricacies of investing in Real Estate. Don’t make a move based on a head assumption. You must not be a master before you start investing, but you must understand that it’s a continual learning process.
The more you know the less likely you are to make mistakes. Simple research like the history of the location, the rental yield, the resale value, and other little findings will go a long way in determining the outcome of your investment. We never stop learning! And who knows? You can wound your way up to becoming a master Real Estate investor. Do your research.
- THE WRONG PEOPLE
The people you associate yourself with are major determinants of success. Real Estate Investment involves working with people. Working with the wrong people can change the entire outcome of your investment story. Some investors trust people blindly, relying on their words. You must look for people who are both reliable and trustworthy. Do the necessary background check on those you intend to work with and make sure you’re comfortable with them!
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- PAYING NO ATTENTION TO PAPERWORK
Paperwork is proof of a transaction. Not having the necessary documents is equivalent to having done no transaction at all. Paperwork is major legal evidence of ownership of a property you invested your money in. Many do not bother about documents and this has landed some well-meaning investors in prison. Do not partner with those who have no legal documents. Do not invest a penny until the papers are provided to you. Also, read the papers thoroughly before signing anything during the investment process.
- GET RICH QUICK MENTALITY!
While Real Estate is very lucrative, nothing good comes easy! Understand that going into any investment requires patience, diligence, and hard work. Starting the “get rich quick” mentality causes many investors to eventually lose everything. In a bid to make money quickly, they hit deals with the wrong people. Understand that investing in real estate is not a get-rich-quick scheme. It is a business that involves hard work and due diligence. There is no shortcut to success. Start and sustain the right mindset while investing!
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