On the one hand, it is generally known that a worthwhile alternative to investing in real estate has yet to be found. By investing in real estate, you can be sure that even if the market collapses, you will still have with an asset in your hands that is not going anywhere. Thus, although you might lose somewhat, still the major portion of your investment will remain in your possession. On the other hand, in the real estate world, you can succeed more or succeed less. In the real estate realm, there are techniques that help to heighten the probability of achieving the highest return possible. Hence coupled with the fact that it is important to thoroughly examine every deal before investing, there are quite a few errors, usually foreseeable that repeat themselves, so that it is hard to explain how, time and time again, investors fall into the same trap. You have decided to invest in real estate? We invite you to gain insights for foreseeing what errors are lurking there on the way. So read on, understand and beware!
Error one – driven by passion
No doubt there is plenty of room for passion in life, however, as far as investments are concerned, common sense must rule – or to put it more aptly, that Excel table, which enables us to understand what the Zero Report, the report that appraises a project’s economic feasibility, shows. Thus if the property is located in a pastoral location, and you are dreaming of how you are going to renovate it (thus making it worth much more), and this is an area where you have always dreamed of purchasing a property, still all the dreams and plans must be put aside, until all the relevant details have been examined calmly and calculatedly.
Error two – underestimating a memorandum of agreement
Often, our sharp senses identify an excellent deal, and the fear that someone else might snatch it before you, along with uncontrolled excitement, can cause a person to shake hands on the deal and even sign a memorandum of understanding/agreement. It is important to make it perfectly clear that you do not sign a memorandum of agreement without involving a lawyer on your behalf. Why? Quite simple. Albeit this is not a document signed by a legal entity, but it is legally enforceable. Consequently, even if such an agreement appears logical and worthwhile, you can be sure that had a professional lawyer gone over it, he would have succeeded in changing it to your advantage. Since we are talking about considerable sums of money, it is a pity to lose out just because you were so keen.
Error three – believing without checking
If you close a deal with the accompaniment of a professional real estate company, you can be sure that it will check every item and fact for you. However, if you are acting on your own behalf, you should stand firmly on 4 feet and check everything said by the other side (regarding the property). Thus, for example, if the seller undertakes that there is no construction deviation, you can nod in acquiescence, but at the same time, approach the local committee and check the building file, with the aim of making sure that the data appearing in the permit are in line with reality.
Another example? Even if logically speaking the property owner is only dealing with us to promote the sale transaction, this must be ensured. How? Just check if there is a warning note (caveat) on the property in the land registry extract (Tabu).
Error four – the price is low and you can’t stop asking questions
There can be no doubt that those seeking to close a real estate deal are looking for a deal that is as cheap as possible. However, if you do find a “bargain”, stop to examine what is behind the low price. For example, it is possible that this is a contractor who wishes to sell an apartment while still “on paper”, before the land was purchased. Hence, if you want to verify what is behind the low price, it is definitely advised to seek the advice of a professional and look into the issue in depth. This could be a real estate lawyer or it could be an appraiser. The point is that it is important that a professional examines the situation in depth.
Error five - ignoring warning signs
On many an occasion, the desire to find worthwhile real estate investments can cause a person to ignore warning signs. For example, if the seller requires a bigger down payment than usual, and even cash, he might be pressured for ready cash. If the seller tries to dissuade you from obtaining documents and at the same time motivates you to look only at the land registry extract, he might be trying to hide something from you (taking into account that the land registry extract is actually a scam). If the seller pressures you to come to a meeting with ready cash, apparently, someone here is under pressure. If the seller says “trust me,” this should turn on a warning light, especially if he tries to avoid drawing up an orderly contract involving a lawyer.
In conclusion
The real estate world indeed offers an amazing return, difficult to find in other fields, and even today, there is no need to have balances of hundreds of thousands of shekels to join the game. Nonetheless, it is imperative to act judiciously and not in haste, and one must also act with some skepticism and examine each parameter in depth (certainly if one senses something “not kosher” [illicit]). In conclusion, it should be emphasized that in the world of real estate, the data is what has to decide, and the same data needs to be demanded, searched and scrutinized with care, whether through supportive professionals or through a visit to the local committee. We wish you every success!
