The most common mistake by real estate investors – and the biggest reason for the failure of investment strategies - is an unwillingness to conduct adequate research.
Many people who attempt property investment or development achieve inferior results because they fail to understand the critical importance of research.
There are many key elements to getting it right with property, including having clear objectives, adopting the right vehicles for investment and getting the funding package right but, none is more important than basic research on the area in which you plan to spend your money.
Goal setting is important. Structure is important. Finance is critical. But research is king!
The investors who do best are those who regard investing as a business and 9 out of 10 people fail to research properly through sheer laziness with only 10% of investors doing the required research upfront.
These people know where to buy, what to buy and they want to know exactly what is going on in the target area.
The rest, unfortunately, don’t do the hard yards on research.
Some are lazy and some are arrogant. They use the ‘time poor’ excuse, or would rather listen to their cousin at a barbecue, or they’ll buy locally because it’s a touch-and-feel scenario and it’s easier.
This is where a lot of mistakes can be made.
It’s important to read all the research reports but there’s no substitute for local knowledge.
You will always get valuable first-hand information from people who are doing business every day in that local market.
A research website may provide a vacancy rate for the overall market in an area but talking to local professionals may reveal different situations in sub-markets; such as high vacancies for four-bed houses but low vacancies for one-bedroom apartments or, vice versa.
The important thing to keep in mind is not to get bogged down in “paralysis by analysis”.
You need to do the research but at some point you need to make decisions and take action.
People say that “knowledge is power” but in reality it should be “applied knowledge is power”.
For example, if you’re a doctor and you don’t practice medicine, it’s just useless information…it’s the same with real estate knowledge!