3 Pitfalls to Avoid When Playing in the Real Estate Game

So you’ve seen your umpteenth infomercial with the guy in his neatly pressed button-upped white T-Shirt grinning ear to ear waving his rock-solid no-money-down rags-to-riches real estate investment course for 3 easy payments of a gazillion dollars (but only if you call now) and now you are thinking, "wow this looks like a great deal, I better get it fast before the special offer expires." You notice how there’s always a special offer? Anyway, I am not saying this guy isn’t telling the truth, however regardless of which course or school of thought you buy into there are several key areas that one must avoid when engaging in any real estate related transaction.

Pitfall Number 1: Don’t Overpay!

The whole point in investing is to find properties that are undervalued. How does one find out what is undervalued versus overvalued? Without getting into technical details, the bottom line is you need experience. Yes much like shopping for anything else, real estate is essentially one of the highest ticket items in the shopping center of life. It’s advisable to stick with one market, perhaps the one closest to you in proximity as a starting off point. Through your experience and asking the right questions, you will eventually have a feel for the pulse of the market you are looking after, and of course identify what is considered a good buy.

Pitfall Number 2: Know the Market

Yes, you are actually going to have to do more work! This part is really common sense though, but executing it where the beauty and the payoff comes in. How do you make money in real estate? The most basic way is to buy low and sell high. So from the first step, you have identified general trends in the value of homes, and are pretty good at spotting undervalued homes. Assuming you acquire that home, you may want to profit from it by selling it off to someone else for a higher price. How can you do this? Well there are many ways. For one, most markets appreciate in value over time so if you want a longer term approach that will work. Making upgrades to the property will automatically raise the price of the home as well. Think in terms of what the market wants, not what you personally want. You aren’t the one buying it; you are trying to sell it to someone else for a higher price than you bought it.

Pitfall Number 3: Know Your Budget

It may be a fine philosophy to go through life on a whim, but real estate is serious business, and thus diligent financial planning and budgeting is critical to your success. Don’t worry you don’t need to be a finance geek, however you need to be disciplined and know your budget from the onset, or you may be finding you are learning that you need to make certain renovations or upgrades, and didn’t anticipate it going over to a certain cost. Think ahead as to what is needed before actually going forth with investing in real estate.

Buying to let guide - UK Rental Property Management

This is where most developers end up. Once executed, this can prove to be money for old rope. Ok thats a bit pushing the point, but here i can teach you some really useful tips on how to let with very little fuss. The essetial element is to first consider the previous chapters as just as important as the monthly cheque you receive from your tennants. In effect the two are very much releated. So re-read those chapters before you get to this exciting chapter on how to but to let.

My 10 Steps to success
Ok i'm going to make this very easy by revealing my 10 steps. Follow this and you will succeed, ignore a step and you may struggle. Here goes...

1. Find the right area to buy into and make some appointments with local letting agents normally estate agents will be able to offer help with letting too .

2. Once you've picked their brains to assess the state of the lettings market (and discovered what type of properties are most in demand) you can begin the house hunting game. Get several viewings under your belt to get a feel of the market.

3. Talk to mortgage providers early on in the game to ensure that you find the best deal. If you have a personal financial advisor, they will do this service free of charge, use this free service, it may save you money and time along with our useful free development guide on this site.

4. Once you've found a suitable property put in an offer and be patient. What you might think is a silly offer may prove to be a bargain, remember you can always increase your offer.

5. When your offer on the property is accepted you'll need to get a licensed conveyor or a solicitor to deal with the legal and financial paperwork.

6. This is the step that can seem to go on forever, the survey and searches.You will also need to get it valued. Then you'll be in a position to finalise your mortgage arrangements with your finance lender.

7. Who will property manage ? Once you've been handed the keys you'll need to decide whether you are happy to manage the property yourself or if you want to hand it over to a letting agent.

8. The chances are that the house will need some work doing on it, so it's best to get the workmen in there as soon as possible. You will find our buying to let profit calculator useful at this point.

9. If you're planning to let the property furnished it makes long-term sense to invest in solid/ robust furniture (ideally carboot sales house clearances or local auctions are an ideal way of sourcing good solid furniture without putting costs through the roof).

10. Before your tenants take control of the property, do make sure that they are clear on the terms of your contract to avoid any later possible complications.