Real estate investing has the potential to generate attractive returns for both first-time and experienced investors. Property tends to be a stable and consistent investment strategy that has traditionally outperformed stock and bond markets over the long-term. But, as with any kind of investing, there are risks involved and easy mistakes to make.
At Bricksave, our mission is to make it as simple as possible for everyone to access investment opportunities that have previously only been available to professional and institutional investors as well as High Net Worth Individuals. But helping people benefit from investing requires us to be honest about risk and do everything we can to ensure people are equipped with the tools and insight they need to succeed.
There is no escaping the fact that real estate investing can be complex. Your chances of success will be significantly stronger, though, if you make sure to avoid these common mistakes that both experienced and new investors make.
1. Not doing your research
It may sound like an oversimplification, but if investing was easy, then everyone would do it. While platforms like Bricksave are making it simpler than ever before to access this asset class, that doesn't mean that you should go in blind. Research is a critical part of investment success, and not doing enough is one of the most common and serious mistakes people make.
If you're balancing family and professional commitments, you may simply not have the time to carry out your due diligence. However, Bricksave's Real Estate Team analyse the global real estate market on behalf of our investors regularly. Investing here means you'll get access to properties in strong markets, minimising risk and maximising your chance of regular returns.
2. Not diversifying enough
We believe that diversification safeguards investors from being too exposed to the risks of real estate investing. If you concentrate all your assets into office buildings in a particular city, an unforeseen event like a recession can have a significant negative impact. By investing in different sectors, asset classes, locations, and currencies, you are not only spreading your risk but also opening yourself up to more opportunities.
While crowdfunding platforms make it easier to diversify investments across asset classes, most do not offer the option to invest across many global locations and currencies. Bricksave allows you to access local and international markets for a fraction of the usual cost, meaning your money will be working harder across the international real estate sector.
Real estate investing is not something that should be rushed. Just like failing to do enough research, committing too much of your assets too early is another common mistake. Balancing risk and responsibility with potential reward is a large part of investing, but it is a skill that needs to be learned.
And like any skill, it's best to start small and make progress in incremental steps. The worst-case scenario of overextending yourself is ending up with large amounts of debt or a portfolio with too many risky assets. Crowdfunding is an excellent way to begin exploring the world of real estate investments with small, manageable amounts and no management obligations.
4. Expecting results fast
Real estate investing is historically more stable than other types of investments, as it's often approached with a medium- or long-term outlook. While you won't see returns as quickly as you may with a volatile, high-risk, high-return form of investment, you're much more likely to enjoy stable, regular returns over a longer period. Ultimately, real estate is the ideal option for investors who are happy to give their money a few years to grow. And if you've got the patience, you're likely to reap the rewards.
5. Not understanding your goals
Taking a long-term view is not just important for understanding how your investments generate value. It also helps you set effective financial goals and make sure that your investment strategy aligns with them. Real estate investing could be the right choice if you are looking to build up funds for retirement or other long-term goals such as funding your children's education. It may not be well suited for funding short-term financial goals, such as buying a new car or treating yourself to a holiday. Your investment choices need to be linked to your life goals, not the other way around.
Bricksave is opening up real estate investing to everyone. Our state-of-the-art platform makes it easy to view, monitor, and manage a global investment portfolio. See how it works.
July 21, 2021
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