Mistakes to Avoid When Investing in Real Estate
The UAE real estate is perceived as a lucrative way of securing existing wealth and increasing it with time. The market depends upon multiple factors and matrices that are subject to change. Therefore, the return of investment and risk assessment can be quoted as pseudoscience and the actual amount is unpredictable. A lot of research, market awareness and business knowledge is essential to acquire the return on investment in the UAE’s real estate.
This can be troublesome for many beginners and professionals at times. To resolve this issue, we have drafted some common mistakes to avoid while investing in real estate for a secure return. These mistakes by any means do not assure higher ROI, but it will secure you from major setbacks.
7 Common Real Estate Investment Mistakes
One of the safest ways to ensure profitable returns on your investment is to invest in real estate. However, real estate investment is not always risk-free, therefore, we have compiled for you some most common real estate investment mistakes for you to avoid.
Not Making a Plan
The very last thing you want to do is invest in a property without understanding how it will be profitable for you. It might be quite tempting to jump into the buying frenzy during a hot real estate market, but you better stand back and come up with a plan.
One of the real estate investment tips for beginners is to always make a purchase strategy first, then search for the property that fits your strategy. For instance, you must be clear whether you want to buy villas or studio apartments for sale in the UAE, then look for the required property.
Skipping the Research
You must ensure that you are investing in a healthy real estate market before you make an actual property investment. If you get into the real estate industry without doing any homework, then be ready to face failure in your first deal.
Additionally, you must have strong faith in the financial viability of the investment you are about to make based on a thorough investigation.
Your investigation of real estate can be started by carefully examining real estate trends. You will have to delve into market statistics for the residential area where you are intending to invest. You can use digital platforms like the Dubai Rest app for this purpose. After that, do some extra research by discussing your near future investments with a professional real estate agent and having his take on your research.
If you think you are an expert in closing a real estate deal all by yourself, you might rethink that. Even though you might have completed many real estate transactions previously, things might not go well when the market goes down. At this stage, you might fail to improve a sinking real estate deal.
Not Hiring a Professional
To gain the most out of a real estate transaction, you must have a list of potential professionals at your disposal. This list should include a property inspector, a lawyer, a handyman, and an insurance agent.
These individuals must be on their heels to inform you of any issues with the property you are about to invest in. Hiring a real estate agent can streamline your property purchases.
Overlooking Needs of Tenants
One of the mistakes to avoid when investing in real estate is to overlook the needs of tenants. If you plan on renting out a property after investment then keep a check on the types of tenants you might get, like young couples, singles, families, or students.
Every family prefers an area with a low crime rate and nearby amenities such as schools, superstores, and hospitals. While singles or young couples usually go for areas with easy access to public transportation and nightlife. Tourists might want short-term rental apartments or houses.
So, you will have to match your investment with the type of tenants you are attracting.
Getting Low Volumes
There are many mortgage alternatives available to allow investors to buy a particular home, that they might not otherwise be able to afford using a more traditional long-term mortgage deal.
Unfortunately, a lot of investors who take interest-only loans or adjustable-rate mortgages (ARMs) pay the price when the interest rate increases. Make sure that’s not you. Make sure that you pay the payments (in case interest rates soar) or have a backup plan to switch to a fixed-rate mortgage when needed.
One of the real estate investing tips is to start with a fixed-rate mortgage or to pay in cash for your investment.
Overpaying
One of the real estate investment mistakes is to fall in love with a property and overpay to obtain it. To avoid this error make sure that you have a tried and tested strategic plan at your bay.
To gain the maximum return on investment, you must purchase a property at a low enough cost to turn a profit, or you might have to pay extra money.
Again, it’s crucial to employ your real estate professionals to determine a home value from which you can profit.
Underestimating Expenses
Both real estate investors and homeowners can vouch that the price of making structural alterations to a property is not enough. Rather you underestimate the expenses you invest in pricing your home to sell fast, such as maintaining the yard and making sure that the appliances are in good condition. In addition to property taxes and insurance.
Before actually developing an interest in a property, it is advisable to make a list of all the estimated monthly expenses of operating and maintaining it.
For people who buy property often, figuring out costs before buying it is also essential. That’s because the time it takes to buy, renovate, and resell a property directly affects its revenues.
This wraps up our guide about real estate investment mistakes. The truth is that everyone would invest in this flourishing real estate market, only if it were that simple. However, luckily a lot of the mistakes in real estate investment can be prevented with careful research and planning before signing a contract.
That said, if you are looking for a residential property for sale in the UAE, then you can find here your ideal property.
Stay tuned to the UAE’s top property blog for more insights into the real estate market.