Real Estate investment seems tempting especially in the cities where the prices rise very fast with the simultaneous growth of infrastructure and industry. There are stories to be heard that many people have made a ransom by speculation and buying a property that was cheap and selling it at a very high price. There may be other rags to riches stories in the real estate domain which propels one to invest as well. Investment without the knowledge of the crux of the game may put one into losses. Like every industry real estate also has few axioms. Nevertheless it’s not like the stock or the capital market. People having a tendency of making quick gains are often seen to loose. This is precisely the reason we are collating the opinions of real estate market watchers and experts who has noticed the common mistakes that investors commit while investing in real estate.

Ignoring Transaction Costs : 

In case of real estate, the investors use the borrowed mortgage money and the amount of transaction cost can at times equal or even exceed the entire amount of the down payment. This creates a big new-car-used-car effect. An example will make it clear. When a new car is bought and is driven off the lot, it inevitably becomes a used car and thus the resale value drops immediately and dramatically.  A similar effect is created in the net worth of the property when one buys a real estate property. If one has to resale the property immediately after a short while he or she would suffer a huge loss as a result of transaction costs of buying and selling the property.

Lack of Research :

If you have bought a car, a television set or a refrigerator you must have gone to different shops and dealers to compare different models and have also made sure that what you are purchasing is worth the money. lack of real estate researchThen the due diligence that should go to the purchase of a house or a property should be more rigorous. The enquiries for each type of user needs like that of a personal home owner, a home flipper or a land developer or a future home owner is different. The prospective home buyer should ask lot of questions about the home and should also enquire about the area and the neighbourhood in which it is located.

Getting Lousy Financing :

Most of the home buyers select a time of buying home according to their stages of life and finances, enquiring little about the market. Many are seen to take loan from the banks for constructing or buying home when the interests rise. The home buyers should be careful about the market rate of interest and should enquire thoroughly before borrowing money. Not only that, there are fixed and floating rates of interest as well. Fixed rates mean that irrespective of the market rate whether it is high or low, the borrower has to pay a fixed rate of interest. Floating rate means the borrower has to pay the current market rates of interest prevailing in the market.

Lack of a Proper Plan :

The veteran real estate experts and the market watchers feel that most of the investors do not have a plan or a strategy which is the biggest mistake the investors commit. lack of proper planThey buy a house or a property because they think it’s a good deal and then start thinking what to do with it. The experienced and successful investors feel that plan is something that is first of all necessary and then the house to fit the plan.

Expecting to be Rich Quickly :

Another mistake is thinking one would get rich quickly and hence the investment, is another big mistake. This kind of psychology the experts feel, urges one to take hasty decisions and makes one bereft of the patience required for the pursuit. One should take real estate as a good long term investment and not a short one like a mutual fund investment.

Bottom Line :

The bottom line that emerges is that investing is real estate should not be done in haste and being tempted with the offer or with an intention of getting rich quickly. Anyway the problems of the investors can be avoided if one takes a decision with proper prior research or due diligence and a proper plan with the right information about the market and the finances.

19 Responses

  1. Venkatesh

    While investing your hard earned money you want to planned otherwise you may fall in problems.If you are giving your money to the builder you want to check the documents and approvals.Don’t trust them blindly and invest your money.

  2. Janardhan

    Hi, many people who are going to invest money in real estate did a common mistake due to lack of information. So they have to make some research for that. I think this article is very helpful for those people to know more about investment. Be careful while investing from the exiting offers from the builders and real estate companies. So you have to verify all the documents before invest.

  3. Subbu

    While investing in real estate there are lots of people can do mistake by choosing the wrong builders and through a bank loans. So do research about the location and builders which is your going to invest. Then only you will get good returns.

  4. Sumith

    Don’t fall into the builders offers traps by existing. So do plan while investing your precious money and time. Enquirer with the friends and legal advisers before buying a home.

  5. Anirudh

    First time home buyers will do main mistake is lack of Research. In the exiting mood home buyers invest their hard money into a builder without any research of their backgrounds or the areas in which what kind f people were living? One of my friends has done the mistake while buying the property, now he is thinking to sell the property which he bought last 3 months back because of his property locates surrounding the slum people. its my advice to the home buyers be careful and search all the activities before buying the property.

  6. Laxman

    I did big mistake in my life by taking my dream home in the excited mood without any proper verification of the materials. After the few months of buying the home, cracks are visible on the walls, the paint color became dim, the water pipe connections are leaking, and problems are facing within the investment of few months. So be careful with the low quality of builders and be alert by doing mistake like me.

  7. Nalikesh

    My friend bought the home by investing huge amount into builder by thinking of he will become quick richest person but unfortunately he lose his dream because he took hasty decision and with the hurry burry mood he bought the property at slum area but now no one is ready to occupy his This blog article is very nice explaining about don’t be hurry burry while buying the property..

  8. Abhinav

    My friend bought the home without any proper verification of property documents from the builder in Chennai. Now he is facing problems by roaming daily to the builder’s office to meet CRMs team about the legal Khata’s of his home. I think he did biggest mistake in his life by investing huge money into the fraud builder. It’s my advice to the home buyers to be careful with the cheaters.

  9. Uddish

    Invest at the certain place at which surrounded by micro markets and the physical attachments of the life’s perspectives. Before doing any mistake by investing precious money into the real estate sector search and check all the useful things should be locate surrounding the properties.

  10. Chandresh

    I did big mistake in my life by investing my hard earned money into fraud builder. Without knowing about the background of the builder from which I booked my dream flat I invested 75 percent amount but till now my flat construction is not yet started. I became frustrated by calling daily to their CRM team. So please it’s my advice to investors before investing check the credibility of builder then move for the next step.

  11. Abhilash

    Due to improper verification of property papers and the approvals so many people were facing problems by spending much of their precious time in their builder’s office. And few are facing problems with the surrounding of homes without any verification of areas they were buy the homes. If home buyer wants to live in safe place with right builder means follow this blog tips which helps from the common mistakes of investing..

  12. Padmaj

    Yes transaction of money matters a lot while investing our precious money into the realtors, this case happened with me when I was invested little amount of first installment after second payment the Bank did delay to give loan on that time I got charge little more and extra taxes over the delays. So we need to keep in mind all the things which are listed in this blog before investing.

  13. Siddesh

    I made a big mistake by booking of my dream flat without any proper information about the area in which my flat is located. Now I’m facing lot of problems with the slum people they were do shout daily till mid knight, always disturbance which irritating to all the people who were all living in my flat project.

  14. Harish

    I bought a flat by paying little amount & I took loan but after 6 months of booking they increased the interest which I’m paying more till now I’m in problem of paying extra money because I didn’t think like this happen with me. So this blog content may help to the investors from falling under the problems…

  15. Rahul

    I did mistake by choosing proper area with the eager of getting low price property, once I entered into my home immediate of few days I came to know the area which I choose is crowded with slum people & robbers. Not even single day noise may come down, everyday there is full of traffic & vehicle sounds.. So it’s my advice to the home buyers before buying the home select noiseless area.

  16. Jaishanth

    With the eagerness of getting home invested without any thinking/planning means you may fall under problems, so before investing keep these blog points and after all proper decision invest your hard earned money then only you will be safe. Immediate decision may lose your temper as well as your precious money..

  17. Rahul

    The main thing is planning while investing money into builder, without planning invested means its like falling into the dark dig. So before investing plan whether the money invested will get double returns and it will be useful in future or not..

  18. Manish

    Really now I’m suffering a lot of problems because of lack of research while investing my hard earned money to the builder. I thought of getting home within my budget but I didn’t see the place whether it’s good or bad. Now I’m facing problems via vehicle sounds, slum area, dirty people surrounding my building and many more.. I’m feeling like I’m living in hell.. So it’s my request to the investors please go through this site points before investing money.

  19. Dinesh

    Yes, I agree with these points, people can do common mistakes while investing their hard earned money without any proper verification of builders. For fresher investors this blog points gives some knowledge and secure the invest from the frauds..


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