Venturing into property investment for the first time can be like stepping into a minefield. There are plenty to watch out for when entering the real estate business for the first time. What seems to be a desirable piece of investment might not be all as it seems. Remember that anything that seems too good to be true, probably isn’t. Property investment is not easy, but it is something that can be studied and learned, and the results can be very rewarding. 

Risk can always be managed with preparation. The key is to also knowing what to watch out for and the right questions to ask. What are the things that should set off the warning bells? Here are a few of the red flags that novices in property investment should take notice when canvassing for an investment. 

Failing to strategize

How do you see yourself as a property investor? Are you going more for short-term yields or do you have a long-term plan for your investment?
 
Take the time to profile yourself first as an investor, and see how you would like to go about your property portfolio. How does a property fit in your long term overall plans for your investments; whether it’s fully in real estate or a combination of other industries. Write down the questions that you have as a novice investor, and find the most specific answers you can give so it would be easier to map out your path. 

Not thinking ahead

It is all too easy to be instantly attached to a property upon viewing. Plenty of people can get easily blinded by a false projection of easy profit.
 
Beautiful property but in a location that is not accessible and likely to be developed soon? Think twice. Your future renters are likely to choose a place that would be near to mass transportation, or choose a developing community that will offer them convenience and accessibility. In contrast, getting a piece of property with lower, more affordable rates can mean a different market. Your potential renters might not be able to pay on time or be trusted to take care of the property, resulting in damages and additional expenses.

Lack of transparency

The seller or the broker’s behaviour is also something to take notice of when eyeing a property. Do you know why they are even selling it at all? If you are looking at property, they should be able to provide you the information that you need and request for. If they refuse to share such details as the history of the house, or possible stretches of time that it has been left vacant, then it’s best to think twice before purchasing. Not only should the seller be able to answer these questions easily, or at least honestly, they should be able to offer you a fair selling price that is based on these questions. For example, if they are uncompromising on price and then refuse to give you the history of the property, then the purchase will not make sense as an investment.  

Lack of cashflow management

There are plenty of first time investors who do not do their research when purchasing property, relying instead on aesthetics, or the misguided thinking that once a property is purchased, it will start generating income and profit. It is not as easy as that. 

First time investors must take the time to understand the cashflow management involved in the property that they are eyeing. Will the income generated cover expenses such as maintenance, long stretches of vacancy, or emergency funds, to name a few? There will be many instances that the investor will have to pay for all these out of pocket 

Not setting a target market

Looking at a huge beautiful property or a modest two-bedroom home to purchase? There are plenty of novice investors who buy into the idea that owning property is enough to generate easy profit. Setting a target market, or having a renter profile in mind can help guide you into your property investment hunt. 

Firstly, those who are looking for property sprawling several thousand acres will not be looking to rent, they will be looking to buy. Those who are looking for a house big enough for a family of four will most likely get a place that has more than two- bedrooms. Knowing the market you have in mind will help you tailor your search.

The bottom line is your investment has to make sense, the numbers should add up, and you will turn a profit. Do not rush into a purchase without equipping yourself with the knowledge needed for you to come out as the winner. Nobody wants to be tied to a property that will be a drain on finances. If you are still not confident to make decisions, then hire someone seasoned to help you prepare and ask the right questions. Your preparation and education will pay off in the long run.