Property investment in America is a big, big decision, in which no one wants to go wrong. After all, we put a lot of money – probably our entire life’s savings – on stake while buying a house. One wrong decision will not only make you lose all your hard-earned money, but will also wind you up in a lot of debt that’s pretty difficult to pay back.
So, what’s the recipe for success? Property investment needs a lot of knowledge of the real estate market and the right skill sets to strike the best deal. But if you are not a pro at buying property in America, here’s a small guide that highlights the common mistakes that beginners make while buying property in America and how you can avoid them to be at the right side of the equation, always.
Real estate investment is a risky game and you must know the trick of the trades to win it hands down. The article highlights some of the classic mistakes that beginners make while investing in real estate and how you can easily avoid them.
- Choosing the wrong location
Getting the location wrong is the biggest mistake that beginners make while investing in American property. Most people, in the fear of losing a good deal, buy whatever comes there way – a house on the main, noisy road; an apartment in the building with poor to zero amenities; and even a house at a distant location with no direct means of transport.
These properties might give you good returns on investment when the property rates in the market are soaring, but as soon as the market drops, these houses are the first to witness no buyers.
Pro Tip: For favorable returns, buying a property in the best location, one that you can afford, should be your only preference. If you can’t buy a decent house in a good location at present, waiting for the right time will only help you reap bigger rewards.
- Buying when the market is at its highest
Many people make property purchase decisions when the real estate market is at its highest. Such people end up paying at least 30%-40% more value than the actual price of the property. They might not get favorable returns when they plan to sell their property.
Pro Tip: Never make purchase decisions in a hurry. Remember, real estate market in America keeps fluctuating. If the property prices in your city are high today, they will definitely come down too. So, always wait for the right time and the right opportunity.
- Not tying up with good real estate agents
Most people, while purchasing a house, either decide to do their own market research or partner with local real estate agents to save money. However, this does more harm than good. Trends in real estate market keep changing every now and then, and it’s very difficult for you to stay current with the changing realty environment. Also, local property agents usually have knowledge of the area they operate in and will only be able to guide you to a certain extent.
Pro Tip: Always tie up with reputed real estate agents who have comprehensive knowledge of the entire property market – various areas and cities. Such agents know the realty market inside-out and can help you buy property at the most favorable location as per your preference and budget.
- Getting head-over-heal for a particular property
Many beginners are guilty of getting emotionally involved into a property deal. They spend minimal time looking for a good deal and finalize the very first home that matches their criteria. Such people end up paying much higher amount than the actual value of the property.
Pro Tip: While finalizing a property, keep your emotions aside. Even if you have found your dream home, it’s best to keep the search on and list houses that closely fit into your criteria. Once you have multiple houses to choose from, sit down and zero in on property that’s available to you at the best price and promises to give you favorable returns on investment. It might not be your dream house/ apartment, but will be worth every penny invested.
- Not doing the research properly
A lot of research and diligence goes into purchasing a home. Investing into a property without doing your bit of research will definitely land you into trouble. Not knowing the area, the vicinity, and neighbors will make you invest into a property that you know nothing about, and there are fair amount of chances that you will buy a home that has lousy neighbors or bad vicinity.
Pro Tip: Before buying a house, you must always do your own bit of research about the location of the property as well as ask the builder or the owner the following questions:
- Why is he/she selling the property?
- Who are the neighbors?
- Is the house close to an upcoming commercial construction site?
- How well is the area connected through various means of transport?
- Is it in close vicinity to school or college?
These questions will help you make a probable purchase decision basis your likes and dislikes.
- Partnering with a bad financing company
There are many housing finance companies in America today, offering home loans at varied rates of interest. Not knowing them all while financing your house can put you in big trouble as you may end up partnering with a financial organization that levies high rate of interest or has other mid-term charges that may increase your EMI amount or prolong your overall loan tenure.
Pro Tip: Talk to, if possible, all financial lenders to know their loan policies, rate of interest and other terms and conditions. Check if they levy pre-payment charges if you want to settle your loan earlier and what are their floating rates of interest. Make a list of all the details and then finalize the lender that best matches your criteria.
- Doing everything on your own
Some people think they know it all and like to take everything in their own hands – from searching a property to finalizing a deal to getting the renovations or interiors done. However, this way, they end up spending a lot more money than they actually should.
Pro Tip: Exploit all possible resources and befriend experts who can help you get the most out of your purchase. Such people know a list of potential sellers who can offer you product and services at discounted rates and can help you save big bucks.
Keeping yourself wary of these classic mistakes can help you minimize your risk on real estate investment and enjoy high returns.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.