1. Buying in the wrong location
A common topic among many property news and blogs are the latest hot spots for property investment, and because it’s coming from a somewhat reliable publisher, people flock those areas trying to search for a house that they could develop into a blue chip property.
Simon Barnes, a property consultant, revealed, unfortunately, that this is a basic error that amateur property investors should stop making. He explained that although a place is tagged as “up and coming” if the place is not nice to live in, such as it’s located on or off busy main roads or has poor links to public transportation, no person or family would be interested in buying houses for sale over there.
2. Taking out expensive financing
Finding for funding is hard most of the time. That’s why a lot of amateur investors take on the first mortgage offered to them with the assumption that they can pay it off when someone buys the property their renovating or developing. But what happens when nobody wants to buy the house? Who’s going to pay for the mortgages then?
Remember to always shop around for the best deal, or find a way to buy the property without paying a huge amount of cash deposit.
3. Getting burned by your builder
Lochie Rankin of home finding agency Lichfields recommends to entering a fixed price contract with your contractor or builder, because it’s easy to get ripped off for more money when the projects takes longer than expected to finish. This doesn’t mean staying away from contractors altogether, since property projects aren’t easy to do if you do it all by yourself.
4. Skimping on quality
Faux tiles, faux oak floors, and many others are the go to solution by many investors to get the luxe look for less. This is a big no-no! If you’re working on a budget it’s better to choose affordable appliances and materials that will last, rather than spend it on things that look nice but will fall apart after a few weeks.
5. Going too over the top
When you watch property make over shows on the T.V., you’d always hear the hosts saying that they’re taking the design over the top to “wow” their clients. But since, you’re building properties for real people and families, it’s better to go for a clean and fresh finish. Sometimes, lavish marble bathrooms with crystal taps and silk carpets aren’t the best way to impress the buyer, as Lochie Rankin also said.
6. Imposing their personal tastes on the property
Amateur investors and developers go all out in decorating an investment property thinking that their potential buyers would just buy everything lock, stock, and barrel. Newsflash! Everyone has their own personal taste, and you’re just turning buyers off if you impose your taste too much on them.
7. Adding too many bedrooms
More bedrooms doesn’t always mean higher value for a home. Alan Waxman, of property developers Landmass, recommends making a high quality and proportionate space for bedrooms, bathrooms, and spacious wardrobes rather than constructing box rooms. First-time investors should also focus on the layout and balance of the space, because poorly planned house is very hard to sell.
8. Being Impulsive
Never start work on a house without first making a plan of the entire project. Don’t forget to create a timeline, apply for the necessary permits, and compute all the expected costs of the project.
Amateurs are so excited to make a quick buck that they keep on forgetting this basic rule in property investment. Waxman added that “the more you plan, the more cost and time efficient the project.” Aside from that, planning is also essential to make sure that the transaction goes on smoothly when the time to sell arrives.
9. Wanting more
The last, and probably, the worst mistake that amateur property investors commit is selling the houses for more than its actual value. Obviously, if the house is overpriced, it would take a long time before it sells. Modern buyers are not easily fooled. They do their homework and know the average price of properties offering the same amenities.