Eight Avoidable Mistakes While Buying An Apartment

Buying an apartment may seem easy at the outset with its lower cost and smaller size of a single unit in shared premises. But apartment investing requires the same amount of due diligence checks and verification as any other property and making a mistake will impact on your property investment nz returns. Apartment buying is complex and often, mistakes are made when the process is not fully understood. These mistakes are behind most of the ‘losers’ both big and small, in the real estate investment game.

An attempt to understand these most common mistakes will make you cautious and careful and help you benefit financially with a good investment decision.
An investment decision of both houses and apartment has long term repercussions and therefore requires careful thinking and planning besides strategies to avoid mistakes others make.

Eight Mistakes that can be avoided

  1. Not formulating a good investment plan- Many investors consider apartments to be in the same league as buying a car or other expensive asset. Nothing could be further from the truth, since an apartment is one asset whose returns increase over time and its value appreciates over time. Before deciding to buy an apartment, it is important to know what it is being bought for, and if it has to be used for investment purposes, then buying a smaller, more saleable, high demand apartment makes sense over a large, sleek apartment that may have few takers. Starting small, and gradually upgrading is a good investment plan.
  2. Buying without knowledge of the local market- Apartments must not be invested in without knowing the local market conditions. A thorough research of the local market with inputs from real estate experts, local players and experienced brokers, besides looking at multiple properties, will help in understanding the market, and finding the best time to invest or catch good investing opportunities.
  3. Buying at the wrong time- Like all other products, apartment markets are also driven by demand and supply equilibrium. Buying when demand is high in a low supply situation, will entail higher prices, and can be easily avoided. It is preferable to wait for supply to catch up with spiraling demand and then make sure the timing s right for an apartment investment, so as to pay less, while ensuring higher returns in the long term.
  4. Not being able to clinch a good deal- A very common mistake is rushing into a deal without due diligence, without exploring all options and making a hurried decision. The seller may shrewdly refuse negotiations and in the end it is the buyer who gets a bad deal due to his own fault of lack of knowledge and not trying hard enough to turn the deal in his favor.
  5. Leveraging too much- Enthusiastic investors often use borrowed funds to make investments and sometimes end up with excessive leverage. This is bound to lead to a resource crunch which may necessitate a distress sale to raise funds or use other routes to pay off debts, all of which will cause financial loss.
  6. Incorrect timing in apartment markets- The best time to invest in the apartment market is when you can ride the wave, when prices are moving upwards but have not peaked. Understanding the market and the current place on the price curve will reveal the right timing. Many investors decide to buy on the basis of the belief that prices always increase in the long run.
  7. Bad property managers- Apartments bought for investment and appreciation need to be managed by efficient managers. A poor manager is bound to push your investment down. Hence it makes sense t engage the services of a good property management company.
  8. Ignorance about real value- Not knowing the real value of the apartment may lead to wrong buying and selling decisions, which will cut returns and even lead to a loss.

Knowledge and information gathered after thorough research is important to avoid these common apartment investing mistakes. These will help in finding lucrative investing deals for properties that will add value and help in achieving long term investment goals.

For further reading from PropertyTutors.com, click on the articles below:

Setting Goals for Financial Independence – click here

Tips for Becoming a Property Expert – click here

Buying Rules for Property Investment – click here

5 Tips to Add Value through Renovation – click here

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