Your next real estate investment needs to be thought out carefully. Taking the plunge into an unknown opportunity is far too risky, particularly here in South Florida, as many investors have learned the hard way over the last decade. To improve your chances of success and maximize your working capital, it’s important to do your homework.
If you’re looking to invest in a condo project, avoiding these five common mistakes will help you avoid prevalent market traps and spot a genuine – and profitable – opportunity.
- Buying at inflated prices: Don’t buy condos in a heated market, as the prices will be inflated. As the saying goes, you make money in real estate by how much you pay for it, not how much you ultimately sell it for.
- Falling for developer hype: Heated markets inevitably attract amateurs out to make quick money. Developers will spend thousands of dollars making the project sound amazing, but a lot of their products lack design and quality. If you’re looking at a particular neighborhood, buy from a local developer with a successful product portfolio.
- Not having a game plan: Before investing in a condo project, you need to formulate a specific plan. Ask yourself: will you manage the property yourself? Are you familiar with capital gains taxes? Is residential real estate the best project for you? If you don’t answer these pertinent questions in a way that makes sound business sense, you run the risk of losing your capital or worse.
- Buying in an uncertain neighborhood and location: All condo investments hinge on their location and the surrounding neighborhood. This doesn’t mean that you should confine your buying to gentrified neighborhoods, but the project needs to have good resale and rental potential in order to be profitable.
- Intending to sell before the project registers: Avoid new construction projects if you are not in a position to obtain a mortgage when they register. Condo assignments are flooding the market and a lot of them are selling below their original purchase price.
To be a savvy and successful investor in the condo market, you need to look at several deals before deploying your capital on those with the most potential. Over time, you will start thinking creatively and acting on instinct when you craft deals – two abilities that mark the successful investor. If you’re thinking about investing in a real estate project, we’d be happy to help. Please contact us today to learn more!
