If you’re just getting started in real estate investing, don’t expect to become an expert overnight. Yes, it’s true that you can make money buying and selling properties. However, it takes knowledge, determination, and skill. It also helps to know some of the classic mistakes that others make when they start investing in property to help you avoid making them too. Here is a look at seven of these pitfalls. Being informed about these mistakes will help you to make the right choices and avoid situations that can cause financial loss.
1. Unplanned or Over Investment in a house can cause you to lose money
Nothing is as important as evaluating your finances when entering a new investment deal. Apart from the major expenses like the cost of the property, closing costs, legal expenses, taxes and registration fee, there are many other hidden costs involved in property investment. If you are buying a house you have to consider moving & packaging costs , maintenance costs, cost of furnishing and interiors, cost of repairs if any, utility charges, etc. Prepare a detailed document of the expenses and check whether you can afford it. If you are planning to take a mortgage, then you must consult with a bank to know your eligibility. Having a good credit score will help you get a loan at lower interest rates and longer repayment tenure. A credit score of 700 or above is considered to be good and increases your credibility to get a loan.\
2. Not doing the research might lead you with the wrong Realtor
This is one of the most overlooked aspects of property investment. Prior to investment, you must first analyze the real estate market conditions and conduct thorough research of the prevailing property rates in the desired location. Without proper knowledge and understanding of the market, chances are more that you may get deceived by brokers or fraudulent agents. Once you shortlist a few properties, you must check aspects like location benefits, land value, rental demand, road connectivity, nearby facilities, builder’s history, etc. Various aspects like lack of water supply, air pollution, poor transport facilities and civic amenities can affect your investment if they go unnoticed.
3. Not paying attention to repairs and maintenance
Bad renovations, sketchy plumbing, and mediocre construction can end up costing you both financially and emotionally—and even in terms of your health. It’s important to know if any major repairs and renovations are required to your home. See whether the seller can assist in major repairs and renovations that require one. Such improvements include any structural additions, installing a new roof, adding/relocating electrical outlets, adding/relocating plumbing fixtures, and installing/replacing an HVAC (heating, venting, and air conditioning) system. Else if you buy a home which requires heavy maintenance, this could turn into a very costly project.
4. Not knowing the Real Estate market conditions
As a real estate investor, it’s important to conduct a real estate market analysis when buying and selling an investment property, whether it be commercial real estate or in the residential market. Real estate markets are fluid. Changing economic conditions, adjustments in supply and demand, or property income and revenues will all affect the value of a property at any given moment. A market analysis, which can also be referred to as a comparative market analysis, identifies market trends such as average rental rate, vacancy rate, and supply and demand in the market area and looks at comparable property using sales data from properties similar in features, location, and property type to derive a price range or likely sales price. An in depth understanding of the North Bay real estate market can help you identify houses and townhouses for sale.
5. Not familiar with the local laws
Canada regulates industries like financing and real estate quite strictly, and so most all transactions remain very transparent and aboveboard. Even so, there’s a lot at stake when you buy a house, and it never pays to be naive. The most important law affecting foreigners is the Foreign Buyer’s Tax, which adds 15% to the price of any home purchased in the Toronto area by a non-permanent resident of Canada. This speculation tax applies equally to foreigners and Canadians, and amounts to about 1% of the property’s market value, to be paid on an annual basis.
Non-Canadians who seek to make money by purchasing rental property in the country will also find themselves paying an additional tax of 15% on all such rental income.
If you’re new to the country or making a substantial foreign investment, it is better to hire an attorney or an accountant to review all of your contracts and legal documents before you sign anything or transfer any funds.
6. Getting emotionally involved with the property might end up spending higher
When making your first real estate investment, you might miss out because of choices made hastily or out of emotion. Your love for properties can be a disadvantage especially when you don’t ask yourself the right questions. Remember, you invest in real estate to make a profit and to obtain the maximum value. When you fall in love with a property, you may lose your lucidity and might end up spending higher, without considering other high yielding properties.
7. Getting caught up in Real Estate Myths might refrain you from starting
The main mistake to avoid when investing in real estate is being afraid to take action, which is usually caused by getting caught up in Real Estate Myths. Myths often pull you back and instill fear of investment. Just because someone else failed does not mean you will have the same fate. As a budding investor, you need training and knowledge. Such training can be done via books, seminars, coaching sessions, and much more. The right knowledge can help you eliminate fear and myths.
Find good houses for sale in North Bay and get yourself a good residential property.
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