In as much as we said that real estate investment is a gold mine, there are certain principles that must be applied in order to hit this gold, and if these principles are ignored, the investor will not be able to achieve his investment goals. Some of the reasons for these failures are as follows:
1) Failure to do a detailed financial analysis of the said property. You can’t just assume that this is the amount that it will cost you to execute a particular project without doing a detailed cost analysis of the project. Invite the cost experts, like the quantity surveyor, who will give you a detailed analysis of what it will take you to finish the project. If the amount you have at hand is enough, then you can precede with your job, but if it will not be enough, then you have to make some adjustments to accommodate your capital. This is very important, because real estate investment is capital intensive, and if you run short of cash mid-way into the project, it becomes a problem which can put you into a serious financial mess.
2) The second reason for failure to meet investment goals is the absence of capable hands to handle real projects. For you to succeed as a real estate investor, you must work with the professionals. After you must have briefed your architect on the type of structure that you want to put up, let the quantity surveyor move in and do a cost analysis of the project. He must not exceed your budget, the architect will be asked to review the project down to accommodate the purse of the investor if the former was higher than the budget. Let the contractor handle the purchase, so as to meet up with time or the set dead line. Time is very important here because the more the project lingers, the higher the cost becomes, because of inflation.
To succeed in the real estate sector, you have to avoid the following:
1) Never buy jointly owned property, except you see the other co-owners, especially when it is a family house. The house may be willed to one of the siblings and if you buy without knowing this, you might be in for litigation that you don’t know when it will end.
2) Don’t try to buy a property that is under litigation already.
3) Be careful before investing your cash on any property.
Adequate application of these steps means that the investor has set the ball rolling on a smooth turf, and all things being equal he will meet up with his investment goals, but neglecting these, simple but critical steps is walking in danger. Remember that the money involved is not kobo, but millions of hard earned currency, which if well managed will continue to roll cash into your purse, but if the reverse is the case, well, your guess is as good as mine.
Be a wise investor.