#1. Looking for a “deal”
This is one of the most common real estate investment mistakes when an investor wants to buy a unit at the cheapest price relative to the rest of the building. Often times, there is a reason why it is less expensive than all other comparables. Also to consider is that your purchase price will be used for future purchases in the same complex/area. If you buy lower than average, the market value drops. If you buy too high, it will take a while for the average to catch up. An experienced and knowledgeable Realtor will be able to provide you with a ballpark price. Depending on the market growth rate, you will be able to see a target goal of what you should pay. See Our Top 10 Real Estate Investment tips.
#2. The “I don’t like the view” syndrome.
This is a mistake made by many new investors. If you have this syndrome, you would view the property from a personal perspective. Perhaps it has a city view but you prefer a water view. Perhaps it has white walls but you prefer blue walls. Maybe it has an electric stove but you prefer a gas stove. But are you going to live there? Too many times we see that “investors” look for places they like personally, and end up with a property that is too niche. This affects the size of the rental market, and the buyer market when you sell. Remember, it’s not about whether you like all the details or not. It’s about what other people would like.
#3. Not enough of a budget.
You need money to make money. The idea of buying a super inexpensive property is usually destined for failure. Many new investors focus so much on the capital invested when they should be more focused on the ROI (Return On Investment) rate. Every area and sub-market have their own “sweet spot”.
#4. Waiting for an even better time to buy/sell.
For the lack of a better word – Greed. Chances are, you will not buy at the absolute lowest point of the market, nor will you sell at the absolute highest point of the market. Long term, Real Estate has always been a positive investment in Vancouver, due to the climate, limited land, port of import/export, etc. However, you need to be aware of the “Real Estate Cycle”. On average, the cycle does a full turn every 7-10 years in Vancouver. Just because the market dropped slightly after you bought, doesn’t mean you lost money. You only lose/make money when you sell. Simply wait, because you should have been well hedged from planning out your rental income, and wait for the market to cycle back up again. Same theory, you will likely not sell at the absolute highest point of the market. Once the growth in your property slows down, sell and invest in another high growth property so you make your money work hard for you continuously. At the end, don’t fall into the Greed trap. It’s better to make $95,000 than trying to make $100k and risk losing more, wouldn’t you agree?
#5. Withholding information from your Realtor.
Telling him/her that your budget is below you’re your real budget is. You need to trust your Realtor. The difference between what your budget is and what you tell your Realtor can result in completely different areas to buy thus a completely different return rate. Take your time and find the right one for you, and trust him/her to advise you. If your views are not lined up, your Realtor could not and would not be able to provide you with all the information and strategies that benefit you. You chose a Realtor for a reason. Trust in your decisions. At the end, you will still be the one that chooses whether to purchase/sell or not.