As is the case with many different situations in this world the ratio of bad to good advice is skewed, and not in your favor. Getting the right advice is incredibly important especially when your money is on the line. If you are thinking about getting involved in property investment but feel like you might not be getting the best advice from your friends, family or real estate agent, here are a few common problems to look out for and what you can do to avoid them.
1. Ignore the media. Newspapers, websites and banks are constantly trying to get your attention with loud headlines and get-rich-quick schemes. While most of us are able to avoid these scams with our heads remaining firmly on our shoulders, bad financial times can come with bad financial decisions. If you are making property investment decisions make sure you are getting a wide variety of information from many different sources before throwing your money at anything.
2. Avoid funding schemes. Property funds are more common in certain areas of the world than others, but are dangerous nonetheless. Property funds are used by companies who invest your money in a property and hope it sells at a rate that allows them to pay their clients back on their investment. Now, with the rate the housing market usually goes… does this sound like a situation you’d win in? Not really! While some property funds are quite successful and well-run this isn’t the best place to be putting your money if you want to invest in property.
3. Buy-to-let properties are another situation in which people can fall prey to bad investments quite quickly. Many people see what looks like a good deal (oh look, low interest rates!) and forget that the end game of investing is to make a profit. Even if you are surrounded by low interest rates and great deals, you might be missing out on the real find hiding behind common sense and solid thinking.
4. Don’t underestimate the power of an overvalued market. Now might not be the time for you to invest in property, even if other people are telling you that it is a great time to invest. Know your finances and how much you can afford to gain or lose in this transaction- if the risk isn’t worth it, walk away with no regrets.
5. Finally, be careful of emotional responses to money and property. We can often fall in love with the perfect property and forget that taking out loans might last a lot longer than that property’s value does. The media and other peoples’ speculations about property values going up and down are always going to create a major hype, but you are free to not get sucked into the madness. Use your head and rely on facts before making any property investment decisions. You might regret not moving quicker, but you’ll never regret not losing money with a poor investment.