There is a lot of information out there that can be very useful for a real estate investor to help in maximizing profits when it comes to investing in pre-construction condos. The main goal for anyone venturing into the condo-investing market is to make profit. However, this can often be easier said than done.
Though it is likely that the experienced investor will not make as many “mistakes” with these type of investments as would the first timer, common mistakes can in fact happen to any investor at any level of investing.
Here are a few of the most common pitfalls when it comes to investing in new condominiums.
1. Predicting future trends
We are all familiar with the idea of buying a property with the hopes that it will be more valuable in the future. The one thing that a real estate investor should always ask himself or herself, is if they are really ready for the inverse, to lose 15% of that investment. Yes, this may seem like an odd thought process when looking to make an investment decision, but the reality is that this could possibly happen early in the investment, prior to a gain being made long term. The trend of a condo’s value going up will occur in locals, but the outcome will certainly not be same every time in every location and at the same rate. If, as an investor you are able to manage a 15% loss in the short term, you are more likely able to handle the investment on a long term basis, which means a less likely chance of an overall depreciation based loss.
2. Copying the gurus
As a new condo investor, there will always be someone that you aspire to be like. You may even find yourself studying specifically what they do, how often and when. Without ever having actually spoken to them about all the variables they use to make their final investment decisions, it would be wrong to simply follow them blindly. You should try to learn about their detailed process and analysis, so that their initial intent and decision criteria’s are clearly defined and properly understood.
3. Failing to keep record
If your idea of record keeping is putting all receipts and contracts into a shoe-box, then you have a long way to go. To truly understand how well your condo investment is doing you will need to keep a record of all the activities that take place around that investment. These items include transactions records, discounts, past estimates and present valuations. It is only when you have well maintained records that you can do a full analysis and present well organized evaluation of your investment.
4. Over-leveraging your ability
When coming across a condo investment that they like, many people make the decision to buy based on what the bank is willing to give them versus what they can actually “comfortably manage”. It makes a lot more sense, especially for first time condo investors, to invest well within your means.
5. Deviating from your process
Just like any other business, investing in real estate is usually not a get rich quick scheme. It’s when you feel you have finally mastered everything about making money in real estate that major mistakes tend to happen. If you have been successful in your investments by practicing due diligence, being well organized and making data driven decisions, moving away from those behaviors simply because of an increase in your investments value can often be a recipe for disaster.
A great way to avoid many of these risks is to seek out professional assistance. The help of an experienced real estate agent can make a huge difference, not to mention save you a ton of time and effort.