Traps of Real Estate Investments

While there is no denying the potential of the real estate sector, traps and pitfalls at various stages make the property market game a wee bit difficult for novices. Even seasoned players fail to get it right all the time. This can be put down to variety of hurdles- psychological and real. Within the ambit of this article, let us take up a few of these.

Choice of location

We cannot compromise the location and still look to triumph. Capital growth and rental yield depend a lot on the location we choose for our investments. For a diversified portfolio, choice of location is even more important. To elaborate, one prime location may give you high capital growth and another may offer a sustained rental yield, thus letting you gear your property portfolio according to your desire.

Bank’s valuation

Always try figuring out in your mind if your prospective home will be liked by your bank. In other words, they are the ones going to finance you and they find certain ventures laden with risk just as they find others appealing. How smooth the road to finance will be may depend on the comparable sales figure of your chosen locality and the kind of home you are buying. Do optimum research.

Off-the-plan properties

When going for an off-the-plan property, ensure that you have a grip on the developer. I know people who have been robbed of their money and dreams by a timely induction of the Sunset Clause by the developer. In fact, I would much like if you go through one of my articles on the subject titled “The Sunset clause should be an exclusive right of buyers”.

Counter-cyclic investments

Making counter-cyclic real estate investments seem cheeky and at times brilliant, too, when you actually pull them off, but this requires a diligent study of the cycle graphs. Such moves with the best of intentions but not much research can make them fall flat on their faces.

House or units

And of course, the house or unit debate continues and how. When choosing one over another, look deeply into the gentrification trends, demographics and the demand-supply graph of a particular locality. Chances are that you will make the right move.