5 mistakes to avoid if you want to invest in real estate

by Jammy Hales The Real Estate Curacao

Real estate investment, like all types of investment, involves risks. They must be known and managed in the best way, trying to avoid errors that could seriously compromise the success of an operation.

 

It should also be stressed that errors in this area can be paid dearly, given that the figures involved are important.

 

It therefore becomes essential to know the most important to avoid committing them, or at least try.

 

What we will talk about in this article comes from direct experience and not from reading books or other people's stories.

 

Here are the 5 mistakes that I consider most risky:

 

Being a wholesaler, not having a team

 

I have often come across investors who think they know everything and believe they are saving money by concentrating a lot of activities on themselves. They take care of going to jointly deposit the projects or do not sell the properties through an agency and directly deal with finding the buyers and making the visits.

 

I myself, together with my partner, in the first operation we did, we fell for all the shoes in this trap.

 

After a few days from the start of the sale of the apartment we managed to find a buyer, so we felt on the top of the world. We felt strong and ready for anything. We had the buyer, but we still had to start the renovations.

 

Sin of arrogance and presumption we wanted to follow everything in first person: the choice of materials, the direction of the works, the changes requested by the buyers, the supply of the necessary materials ... we continuously intruded in the work of the surveyor and the construction company!

 

What was the outcome? A complete failure. The profit decreased from about 20k to just 3k (and we were lucky not to go under), the works lasted 3 months longer, the buyers were very unhappy because we had wrongly supplied the finishing materials ... We also risked losing the buyer.

 

We did not have the necessary skills and experience; we need the right professionals to follow every area of ​​the real estate operation.

 

What to learn from this experience? That we cannot claim to have the knowledge of a surveyor, an engineer, an accountant, a lawyer and a building contractor all in our person.

 

We must recognize that there are professionals who can perform that particular task better than we do, we must delegate these activities to those who know how to carry them out.

 

Delegating professionals for their specific activities:

 

·         Reduce the risk of error. An experienced engineer certainly has more knowledge and skills (in his specific sector) than you do. He will therefore be able to solve the problems that arise and avoid critical issues in which you could have fallen.

·         You will have a free mind and we will be full of a thousand technical problems. These problems may seem difficult to solve and put you under pressure. For a professional, however, they are normal routines and know how to solve them.

·         You will have free time to devote to the activities that are really important to you, such as finding and studying new investment opportunities.

For this reason, if you are not in the sector or do not want to be overwhelmed by problems and waste a lot of time, I advise you to rely on professionals or companies experienced in the management of real estate operations.

 

Choose the construction company based on the best estimate

 

 

Very typical mistake: having the estimate of the renovation works done by 3 or 4 construction companies and choosing the one that offers us the most advantageous price.

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Businesses know that most people think this way, and a less serious firm could produce the best possible quote to get the job.

 

At that point he has various ways to raise the initially low job price and increase his earnings. For example:

 

·         Could use poor quality materials

·         It may employ staff who are not regularly recruited

·         During the works, he could bring out an infinite series of unexpected events in order to increase costs

 

To overcome these problems it is important to choose the construction company not only on the basis of the price but also on the basis of other factors, such as: estimated deadlines for the execution of the works, solidity of the construction company, recommendations of trusted people.

 

It is of fundamental importance to enter into a contract built ad hoc by our trusted lawyer to regulate the relationship with the construction company, it is necessary to regulate all aspects in order not to go against unpleasant surprises.

 

Choose the property instinctively or according to your taste

 

We are human beings and as such we tend to follow our emotions. Very often I have heard phrases like: "I know it's a good operation, I feel it!" or: "I follow my instincts, my belly".

 

In the real estate sector, as in any type of investment, it is not convenient to follow the instinct. It is essential to rely on numbers, facts and truthful predictions.

 

It is equally important to do all this based on precise guidelines and parameters, also built on experience. This is useful for having fixed conditions for selecting a property, without risking being carried away by the enthusiasm of the moment or by instinct.

 

Be based on what people say and not on numbers and facts

 

There are also other phrases that people often repeat to me, things like: "the real estate market is not working" or "you will never sell a house in that area".

 

They are all opinions, being based on the opinions of others is one of the most wrong things we can do, in any area of ​​life.

 

In this regard, I remember with pleasure one of the first real estate transactions that I developed with my partner. It was an apartment to renovate on the outskirts of Lucca, in a neighborhood called San Vito. All the real estate agents and the people we talked to about this opportunity laughed at us saying that we would never sell an apartment in that area.

 

We sold it in a couple of weeks before we even got started.

 

 

This because? Because we didn't let ourselves be influenced by the opinions of some people, we knew the facts. We know the prices, the number of trades and the growth rate of each area. This is why we know how to judge the opinions that people churn out so easily.

 

The antidote for fighting opinions is facts, and it's our job to get to know them.

 

Use a standard contract for all transactions

 

 

I met several operators in the sector who use a standard contract for all operations, perhaps one of those that are provided in training courses.

 

It is a very dangerous way of operating, as each operation makes history in itself.

 

Each time the agreements and needs are different, situations change and, since making a contract also means taking on a formal commitment, it must be done with a tool built ad hoc by our lawyer in concert with all the necessary professionals (accountant, engineer…).

 

Read also: Are you looking for investment properties in Curacao

 

Our security and tranquility are at stake. Choose the best lawyer, the best notary and pay them well to build iron contracts, unassailable, which will secure your investment.

 

I could write pages and pages, telling mistakes and personal experiences, but I think I have grouped some of the main mistakes that an investor may encounter, especially in real estate.

 

After all, we must try to learn from our mistakes and if someone has committed them before us take a cue!

 

What I recommend to all the people who ask me for a tip, and who I would also advise you who are reading this article, is to rely on people or companies who have experience in the sector and who know how the real estate transactions to minimize risks.

 

If you want to deepen the topic or simply understand how we work and how we can be useful, do not hesitate to contact us by leaving your data on this site or by writing a message to our Linkedin or Facebook page.

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Created on Jul 20th 2020 22:16. Viewed 390 times.

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