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How to Avoid Losing Money When Investing in Properties

Sep 11, 2008
Property investment is something which is attracting more and more people to the world of investing every single day. A lot of money can be made in this way, as long as you invest carefully. The potential profits are large in property investment, but so are the potential losses.

This article will give you a little insight on the problems which are commonly made by property investors. If you are aware of these potential mistakes, you will be well prepared to avoid them and make good, profitable property investments.

What Can Go Wrong?

Suppose that you find what looks to you to be the ideal property for investment. It looks perfect in every way and you can already visualize how you will fix up the property and of course, the profits you will make. You have the liquid assets, you are confident that your offer will be accepted and it seems all laid right out before you - so what can go wrong here? The answer is a lot!

Mr. Booth has just purchased his ideal investment property. Listed for $150,000, he managed to negotiate a closing deal of $120,000. Situated in an ideal location, the property is likely to bring in $180,000 at least once the required changes have been made. The changes themselves are minimal. Mr. Booth inspected the property himself and though he did find some problems, they seemed to only to be cosmetic - nothing that a few coats of paint and a few replacement lights wouldn't fix. However, a month after the property had been purchased Mr. Booth noticed that the walls had become damp. After calling out an expert, he found out that the original owner had not repaired a leaky pipe. The pipe had started to leak more than ever and it had caused serious damage. It would cost thousands of dollars to repair as the pipes needed to be ripped out and replaced and a mould problem had developed which also needed eliminating.

The above is just one example of what can go wrong. There are so many unexpected problems that can arise from property investment that many people just do not consider. Other common potential problems include:

The cost of repairing the property being more than the selling price of the property

There are hidden problems

Ending up with a property which is different than expected

Becoming Emotionally Attached

Failing to recognize the competition

The above are just a few of the most common potential property investment problems. There are many more that you should also become aware of if you want to ensure that you make the right choices. So just how can you avoid making these mistakes?

Hiring a Professional

The easiest way to steer clear of these common property investment pitfalls is to hire a professional.

Hiring a property inspector is very helpful; they will give the property a thorough look and let you know what the problems are with the property, helping you to plan for investments. They can also give you information on the energy efficiency of the property and whether it is in compliance with building regulations.

Investment properties require a large investment, so it only makes sense to do things the right way to make the most of this large investment. Hiring a professional can help you to not make the costly mistakes made by all too many property investors and thus see larger profits.
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