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‘Mistakes maketh the man.’
Yes, we all have heard this famous quote.
Some mistakes are easy to overcome, but others come with high risk and the potential for high financial losses, especially in the real estate industry. No doubt, real estate is one of the most lucrative investment opportunities in Pakistan and a huge number of people invest in real estate every month. The high rate of returns, high liquidity, and security of the investment, make real estate one of the most sought after investment avenues in Pakistan.
Here are some thoughts on ways to avoid the most common missteps while investing in real estate, and enjoy a financially lucrative yet stable and carefree life.
- Proper Planning
- Having no investment team
- Having no prior knowledge of real estate
- No understanding of the local market
- “Get rich quick” mentality
- Choosing the wrong real estate agent
1. Proper Planning
One of the most common mistakes people make in real estate is: jumping on a deal without proper planning. You come across a good deal, and you try to get it without doing the due diligence.
This is not the ideal scenario.
Real estate specialists always emphasize on proper planning before making any decision. There are many things to consider before investing in real estate. Research and plan accordingly. Hasty decisions may lead to greater problems in the future, such as higher financial risks.
Most of the time, people function in reverse. First, they buy a property and then they try to figure out what to do with it. Trust me, it’s the worst thing you can do with your hard-earned money.
How to avoid this mistake?
Come up with a business strategy, stick to it and work accordingly. Only invest when your business strategy is aligned with your investment options.
2. Having No Investment Team
Unfortunately, real estate is not a one-man show. If you want to succeed in this industry, you need to work with industry professionals. It is a diverse field where professionals from different backgrounds come together and work as a unit to achieve long term goals.
Usually, people try to do the tasks on their own which leads to a disastrous situation.
How to avoid this mistake?
If you are interested in investing in real estate, get on board with a group of professionals to explore the real estate market.
Ideally, you need a seasoned realtor, home inspector, interior designer/ architect, and attorney.
These people will be of pivotal importance because they will ensure everything is smooth and on track.
Not only this, but these professionals will also help you connect with other investors and like-minded people. In short, it will be a win-win situation for you.
3. Having No Prior Knowledge of Real Estate
Have you ever seen a novice making a disaster in the kitchen? Well, that’s exactly what you will look like if you try to dive into real estate without any knowledge. Period.
The real estate market is changing at a very fast pace. To stay on track, you need to learn as much as you can about real estate. You need to have sound knowledge about raw materials, buildings, locations, rules, regulations, policies, and so on. Try to grasp the crux of each category to make better and well-informed decisions. Read a guide to real estate investment.
How to avoid this mistake
Learn about real estate.
The best way to gain knowledge about real estate is by reading real estate books, watching real estate TV shows, and listening to real estate podcasts. All these media are easy to use, convenient and interesting, not to mention free.
Remember, you will not become a real estate guru in the blink of an eye. You need time and dedication to come out as a seasoned real estate professional. So, start from today and leave no stone unturned to broaden the horizons of your knowledge.
4. No Understanding of the Local Market
“You can spend your whole life traveling around the world searching for the Garden of Eden, or you can create it in your backyard.”
― Khang Kijarro Nguyen.
It is extremely important to have hands-on knowledge of the local real estate market. Sometimes, people invest in places without having any prior knowledge. This lack of knowledge and understanding can hurt your investment in the long run.
For instance, you invest in a housing scheme in another city without doing a proper background check. Later on, you came to know that the housing scheme was not approved by the respective development authority. Result? Millions of rupees of investment down the drain.
This is one of the most common scams and frauds in the Pakistani real estate market which you should avoid.
How to avoid a mistake?
Try to know as much as you can about the local real estate market. Ask around, contact the development authorities, visit authorized websites, and explore on your own.
Some of the things you should know are:
- Land value
- Property taxes
- Laws and regulations
- Home value
- Raw material rate
- Labor rate
- Labor laws
5. “Get Rich Quick” Mentality
This is amongst the biggest mistakes in real estate investing.
Yes, real estate comes with a lot of advantages including the potential for financial gains but please, bear in mind that investing in real estate does not mean that you have won a lottery.
You might get lucky and flip a home but you should always have a realistic mindset. Real estate tends to come with a long term strategy. In short, you might have to wait for some time before reaping the financial benefits. Be prepared to be patient.
6. Choosing the Wrong Real Estate Agent
This is one of the most common mistakes people make when they invest in real estate. A real estate agent can either make you or break you. A trustworthy and professional real estate agent will help you avoid all the aforementioned pitfalls.
So, do your due diligence and select your real estate agent wisely. There are many so-called “real estate agents” in the market but not all of them are trustworthy and helpful. They will charge you a large sum of money, and that too, for nothing, and even after that you might be left in a tough situation.
How to avoid this mistake?
You should seek out someone who knows the ins and outs of real estate. They should be well aware of all the latest market trends, rules & regulations. Most importantly, they should have a track record of success. An easy way to know about the success rate of the real estate agent is to observe their past records and customer reviews.
If you are looking for a competent and reliable real estate agent in Rawalpindi, Islamabad, Karachi, Lahore, and Peshawar, consult Granna.com today. Graana.com, Pakistan’s smartest portal has partnered with top-tier real estate agents that will leave no stone unturned to safeguard and grow your hard-earned money.
So, these were some of the most common real estate mistakes you should avoid at any cost. These real estate mistakes coupled with real estate scams can result in heavy losses. Give these mistakes a read and get over them to become a successful real estate investor.