Tue. Sep 29th, 2020

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Two red flags to property investment

2 min read
the red flags of property investment

Why is property a terrific investment?

When you get it right, property investment provides a stable income over an extended period. The market moves slowly enough that you adapt to fluctuations. Additionally, your work together with inflation generally means you make a profit if you decide to sell.

That is, so long as you have seen the property investment red flags.

Not all property investment opportunities provide equal rewards. In actuality, a combination of terrible research and bad timing could result in you losing money on the investment.

You will need to learn about these red flags to avoid making property investment mistakes. Here are two of these.

The figures don’t add up

Investing in property is just like running a small business. The numbers all need to add up, or else you won’t create a profit. The expense of the mortgage is just the initial cost you have to consider. Investors also need to account for ongoing maintenance, advertising expenses, and other penalties. All of these drain your resources.

Make all these calculations in advance. You will already have a budget in place to deal with the purchase but look past the initial expenses. Ask yourself one question: would the money I earn each month cover my costs?

Your calculations may show that it won’t. That is a huge red flag. Continuing with the investment then sets you up for failure. Even if the property can grow, you still want it to make enough to cover you as you make those improvements.

To organise an inspection is oh so difficult

In general obstructive sellers throw up all kinds of red flags. However, the worst are the ones that won’t allow you to get your own inspection or valuation.

Sellers like that seem to be saying that you must purchase right now or they will take another offer.

The simple fact is that you need to perform a building inspection for each property investment. If you do not, you leave yourself open for a few high costs later on. That review may detect issues that the seller attempted to conceal. That golden opportunity could turn out to resemble the worst investment in the entire world.

If the seller does not permit an inspection, take your business elsewhere.

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