Avoiding the pitfalls of a property investment
More than anything, commit to a waiting game when it comes to the selling
Although any asset is an achievement in itself, success to most property investors is really determined by their ability to continue purchasing real estate.
Unfortunately, so many UAE residents save for years to be able to afford an investment property, but often once they achieve this, their progress remains stagnant because they aren’t sure of their next move. Many people avoid investing in property entirely out of fear of failing, and the recession only cemented their worst fears.
We also know that after the market plummeted in 2007, it took some time for investors to regain confidence in Dubai as a safe destination for property investment. Scores of residents and foreign investors managed to cash in at the high of the market, but countless saw major losses during the crash, before the market slowly re-emerged, albeit bruised and battered.
Since then, keen investors have rightfully come to view Dubai’s real estate as a long-term game rather than an opportunity to make a quick buck. Investing is a long term game, and if you want to see yourself grow financially, you have to think strategically. For example, in Old Town Dubai, the average price for a one-bed unit was approximately Dh600,000 10 years ago, and it is now Dh1.2 million. The buy was in a time of crisis for the UAE economy.
According to the Dubai Land Department, 69,000 transactions were done during 2017, with the overall transaction value at Dh285 billion. This certainly cements the idea that Dubai is a fertile ground for investors and reflects the strength of the market and its ability to grow. It also presents opportunities for both experienced and green investors to play a smart game.
Throughout the years of building my own portfolio, I learnt that the attitude of the investor will continue to play a significant role in long-term investment success. I share below the five most common attitudes that cause people to ultimately fail in this market.
When a person is investing such a large amount, it’s natural for them to want it to be something that they consider perfect. When it comes to real estate, however, rather than purchasing a property based on personal preferences, it’s crucial to prioritise the wants and needs of the target tenant. If an investor puts themselves first, they not only decrease the pool of prospective tenants, but risk making emotionally-charged decisions.
When it comes to property investment, patience is definitely a virtue. Real estate is a long-term commitment, and a common example of an investor failing to reach their target financial outcome is when they lack patience and flip the property for a short-term gain. In order to increase capital growth, and guarantee rental advances, a property needs to be held for at least seven years.
Dubai is now attracting long-term investors from all over the world and the flippers of yesteryear are out the door, patience will be a virtue and will pay off.
Not taking responsibility
Often there are numerous parties involved in purchasing an investment property, and a common mistake among failed investors is to blame others for issues that occur. Although certain tasks may be managed by particular people, the responsibility of the property ultimately lies with the investor. If something goes wrong it is crucial to take accountability and work to rectify the situation rather than passing the blame.
Countless investors’ experience “analysis-paralysis” and overly scrutinise any potential purchase to ensure the property is perfect. Although it’s always important to make an informed decision, if an investor has done their due diligence and is comfortable with the return, it’s important to buy without too much hesitation to avoid missing out.
Doing it alone
In order to cut costs, many investors attempt to find, purchase, and manage a property alone. Although this is possible, for most, it results in failure or having to spend more in the long-run to rectify problems that arise. To guarantee success it’s important to enlist the help of professionals who can ensure the entire process runs smoothly and with the investor’s best interests in mind.
Zaki Ameer is the founder of Dream Design Real Estate.
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