When someone invests for the first time, they always want returns as soon as possible. This is the first mistake many beginners make when they start in the world of real estate. They want a quick return on their investment and move on to the next venture, which is unfortunately not possible unless something exceptional happens. According to a well-known real estate investor, Anton Senderov, “People think real estate investment is about making quick money whereas it’s the exact opposite. If you want to invest in real estate, you first have to learn to be patient.”
Here are some reasons you have to be patient when you make your first or hundredth investment in real estate.
Good Returns Take Time
It is possible for you to make a return on your investment fast, but the return will be very small. You don’t want to invest hundreds of thousands of dollars only to make a puny return. For you to be able to get good value back on your investment, you first have to learn to wait. For example, if you buy a piece of land for commercial or residential purposes, you will have to wait for that society to become a bit populated. The more that society develops, the higher the prices of the land go. Therefore, it requires skills to identify the future potential of a project.
Some projects develop fast while others can be slow. Just because a project seems like wilderness today doesn’t mean it will not develop for decades. Similarly, just because a project seems half-developed today doesn’t mean it will be complete tomorrow.
You Could Lose Your Investment
Believe it or not, if you try to be too fast, you might even lose your investment and end up with a loss. This usually happens when you try to flip your first property. A lot of people think that property flipping is an easy and quick way to make money in real estate, but what they don’t realize is that it is just as risky as any other form of investment in the market.
“The new investor thinks they will buy a house, paint a few corners, improve the landscape, and sell the property back for a higher price. What they don’t realize is that they could end up spending more on the property than they make after all the costs are taken out,” says Anton Senderov.
You might buy a house for $100,000 and invest $15000 on renovating it. You might think selling the same house for $130,000 would do but that’s not true. There are fees associated with transferring the house’s ownership to your name. Secondly, you want to make enough money to buy a new and more highly valued property next. You might have to spend money on open houses as well. In other words, you either won’t make anything or will end up with a loss of a few thousand dollars.
You Miss out on a Big Opportunity
You saw a society or a new commercial project and you thought that was it. You just want to invest in it because you like it. You want to be fast so you can make money quickly. What you don’t realize is that if you browse the market a little more, you will find better options. You can’t just look at one option and say it’s the best without comparing it with no other project. So, always make sure that you have enough time to weigh your options and compare them before you pick one. Don’t fall for the first project you see on the market.
It’s not just real estate but any other type of investment also requires you to be patient. Your investments take time to rise in value and you have to keep that in mind before you put everything at stake. Always get expert advice before you make your first real estate investment.