4 Mistakes to Avoid When Buying Real Estate

Purchasing real estate can be a complex process involving many steps. It’s easy for even a seasoned real estate investor to make mistakes during a purchase if they’re not careful.

That doesn’t need to happen to you. Whether this is your first time purchasing real estate, or you already have some experience in this area, the following are four mistakes to avoid making throughout the process.

Not Conducting Thorough Research

Devoting sufficient time to research should be among your top priorities when buying any type of property. You want to be confident your purchase has a strong likelihood of delivering a significant return-on-investment. Through research, you can also check for any conditions (such as environmental issues) that may have a negative impact on the property’s value.

Along with researching the general history of a property, you might also want to look into how long it’s been on the market. If a property has been available for a while without finding a buyer, it could indicate there’s an underlying problem of which you should be aware.

Not Considering Who Your Tenants Will Be

If you’re buying a property strictly for yourself, you only need to account for your own preferences and tastes when evaluating a property’s appeal.

However, you may be purchasing real estate with the intention of renting to tenants or selling to other buyers in the future. If so, you need to consider what types of tenants or buyers your target customer base might consist of, and what types of features and qualities they look for in properties.

For example, maybe you’re thinking about buying a property for the purposes of offering luxury rentals to high-income individuals. You might thus wish to confirm the property you’re buying is near the types of amenities and neighborhoods that attract such tenants. By defining your ideal tenants and customers ahead of time, you can more effectively gauge whether a property is worth investing in.

Paying More Than You Should

It’s easy to let your enthusiasm get the better of you if you become aware of a “dream property” that you wish to claim before someone else does. Be cautious of this, and monitor your emotional reaction accordingly throughout the process of buying real estate.

Don’t agree to pay a certain price for any piece of real estate until you’ve had time to conduct thorough research first. Compare the asking price to that of similar properties in the area to ensure you’re getting a fair deal.

Not Working With a Lawyer

Hiring a real estate attorney when purchasing any type of real estate is wise for several reasons. Depending on the circumstances, an attorney may assist you in the following critical ways:

  • Reviewing broker agreements/contracts to ensure they’re fair before you sign anything
  • Drafting any contracts you may need
  • Facilitating a title search and insuring the title
  • Handling any negotiations that may arise

Those are just a few examples. Essentially, a lawyer can guide you through the process of buying real estate, giving you the peace of mind that comes from knowing a legal professional is on your side.

The Importance of Careful Planning When Buying Real Estate

None of this is meant to worry you. On the contrary, the purpose of this overview is to make the process of buying real estate as easy as possible for you. When you understand what types of common mistakes people often make in these transactions, you may be better prepared to guard against making them yourself.

Roach & Lin, P.C., is a Long Island law firm REO sales, loan origination, and related services.