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5 mistakes real estate investors should avoid

5 mistakes real estate investors should avoid

Real estate has always been a popular way to invest money. This is because there’s a constant need for good housing options. Buying a property for investment purposes will give good returns every year. However, one must take a certain level of risk. People should also have enough knowledge about the market to avoid huge losses. One way to succeed is to know the five common mistakes other real estate investors make when investing.

Not making a solid plan
One should have a well-defined plan before starting the real estate investment journey. Buying a house can be risky without understanding how it will generate gains or income. Since there are different types of real estate properties, people can start by studying each type. For example, a vacation rental, an office, and a home. While one may feel tempted to invest when an attractive deal lands, it is wise to take a step back and think if the investment fits into long-term goals. Always consider how the investment will fare if the market goes down!

Skipping research
Just like any big purchase, investing in real estate requires research. However, the research here needs to be more thorough. After all, a home is more expensive than a television or a car. Research usually involves asking questions about the property, such as its size, neighborhood, etc. Here are some questions to help kick-start the research:

  • Is the real estate property close to a commercial site, or will major construction start soon?
  • What plans does the city have for the area and its neighborhood?
  • How has the area changed, or is it expected to change in terms of demographics or households?
  • Is the property in a disaster zone, such as a flood or earthquake zone, or a problematic area known for radon or termite problems?
  • Does the property have any permit or foundation issues that must be taken care of?
  • Will anything need to be replaced or repaired?
  • Why is the property on the market for sale?
  • Did anyone own the property before? If yes, how much did they pay  at the time of purchase?

Doing everything alone
Many real estate investors often make the mistake of thinking they can close the deal without help. Sure, that’s possible, but it can cause many problems later. For example, one may not find buyers or tenants when the market drops. So, it is crucial to use every resource. One should connect with experts who can assist in making the right purchase. These experts can include highly experienced and competent real estate agents, home inspectors, attorneys, and insurance representatives. They can tell people about any flaws or problems in the property or documentation. This step is crucial because selling a property later may be challenging if it has problems.

Not getting proper financing
Real estate investors have many options when it comes to getting financing for their investments. Several alternatives exist, from conventional 30-year mortgage agreements to secure adjustable-rate mortgages (ARMs) and interest-only loans. However, not all would be the right fit. For instance, interest-only loans and ARMs will be expensive if the rates decrease. One should check out as many financing options as possible. If needed, the individual can consult an expert to understand which option would be the right fit for the investment one wants.

Overpaying for the property
This is usually a mistake that anxious buyers make. They instantly like a property and are eager to take it off the hands of the seller as soon as possible. So, they end up overbidding and paying more than the property’s actual worth. Considering this purchase is for investment purposes, overpaying on the property does not make for a profitable decision. To avoid this, one should always check the cost of similar properties in the neighborhood. One should also look at the prices of similar properties on real estate databases, websites, and local newspapers. It is essential to have patience instead of overpaying. Even if a deal fails, there will always be another favorable investment that will be worth one’s money. Sure, finding the correct value of a property can take time, but it increases profits and helps one get the most out of the investment.

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If you think prepaid debit cards have no value, you might want to reassess your theory and catch up with this smart budgeting tool. Prepaid cards can save you from overspending and help you budget without much hassle. You also won't have to worry much about transaction fraud or losing millions from the account in case of theft. That's not all. A prepaid debit card can come in handy in many other situations too. Easier money management Prepaid debit cards are an effective tool to curb unnecessary expenses. If you cannot help but go a little crazy on your retail therapy spree, this card might be the perfect solution. Once you load your card with a certain amount, you know without a doubt that there's no extra spending you can indulge in. Since the card encourages people to manage their money well, many have opted for it as a go-to payment method. Help with business budgeting If you're bad at tracking how much you spend or often fail to meet business expenses without spending out of pocket, prepaid debit cards can help organize your finances. Getting a prepaid card for business expenses means you no longer have to worry about either spending your personal cash or going over budget with business spending. At the same time, you can communally use the card for your startup without having to remind the team members to stay within spending limits. Reliable travel buddy One of the top reasons to invest in a prepaid debit card is that it makes for a nifty travel companion. Want to spend a weekend out of town partaking in adventures? Headed on a long vacation to another country? A prepaid debit card is an answer to your money-carrying concerns. Most prepaid or reloaded cards are accepted in various countries at payment points and ATMs. Some even offer payment options in local currency and USD. No account necessary Another great benefit of getting a prepaid debit card is that you might not need to sign up with a credit union or open a bank account. This is especially useful for people who don't want to go through the hassle of managing an additional account or already have to take care of a checking account. Since there's no bank account, prepaid cards provide the convenience of paying in plastic without bothering about the bank's processing fees. Moreover, you might be surprised to find out that transactions via certain prepaid cards cost less than bank debit cards! Besides providing the above benefits, prepaid cards are a fantastic source of rewards and rebates. Some even let you convert your rewards to cash, further contributing to your savings. But it's crucial to choose the right card. Some top prepaid debit card options you might want to look at are: Netspend® Visa® Prepaid Debit Card The Netspend® Visa® Prepaid Card works like any other traditional card, except it isn't linked to a bank account. If a poor credit history is in your way of getting a checking account, this might be the solution to your problems. By getting a Netspend® Visa® or Mastercard® prepaid card, you can access all banking features in the same place without hassle. In addition, you can load up $1,000 or more cyclically on the card without paying a monthly fee. Bluebird® American Express® Prepaid Debit With a monthly fee of $0 and free withdrawals from in-network ATMs, the Bluebird® card is among the sought-after prepaid debit cards. The cash loading limit for temporary cards starts from $1 and goes up to $500; however, when your card is activated, your reload limits range from $20-$1,999. In addition to these benefits, American Express® users can reload their cards a couple of days earlier than the originally scheduled date. Greenlight Debit Card With no ATM fee or reload fee, the Greenlight Debit Card is a great choice for parents looking to hand over the card to their kids. The card even comes with its own range of money management lessons to help children learn about responsible spending and saving behavior. However, you will have to shell out some money to pay the monthly fees, and it can't be reloaded with cash. Many banks offer cash cards as an alternative to debit cards. Cash cards can be used at ATMs to withdraw money, but unlike other prepaid debit cards, you won't be able to make payments in most cases.

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Many people prefer tried-and-tested, low-risk investment options because these offer protection in the face of economic uncertainties. Index funds are among such investment options, and quite a few of them end up performing better than other types of mutual funds. Vanguard, a giant in the investment management industry, offers a host of index funds that strike the right balance between risks and returns. Here are some of its best index funds to consider buying today: 1. Vanguard S&P 500 This popular index fund is also called the Vanguard 500 Index Fund (VFIAX), and it tracks and invests in stocks that are a part of the S&P 500 index. Basically, the S&P 500 index tracks the stocks of the top 500 companies that are listed on stock exchanges in the country, so there is a good chance of high returns. Also, investing in this fund diversifies the investor portfolio to a great extent, reducing overall risk. The risk further diminishes with this type of investment because it tracks a highly reputed index in the financial market. The Vanguard S&P 500 lends itself well to long-term investment goals, wherein the plan is to let the corpus grow on its own time before reaping its benefits. 2. Vanguard Total Bond Market Index Fund This index fund tracks the performance of the Bloomberg U.S. Aggregate Float Adjusted Index and exposes one to a broad and market-weighted bond index. The fund involves investment in securities backed by mortgage and U.S. treasury bonds. It tracks short-term, intermediate, and long-term bonds, so investors with different investment objectives can consider this index fund. One of the possible drawbacks of this option is that when interest rates increase, the bond’s price in the portfolio may drop, so its net asset value also decreases. However, this is also true for other bond investments. So, if one is sure about investing in bonds, the Vanguard Total Bond Market Index Fund is worth considering. 3. Vanguard Balanced Index Fund This type of index fund is suitable for those who are willing to undertake risk to a certain extent but also need some security. The fund essentially tracks a popular stock index with 60% of the investor’s corpus and uses the remaining 40% to track the performance of a broad, market-weighted bond index. The stock index ensures high yields, whereas the bond index increases the investment’s security. So, it may be well-suited to those who have moderate risk tolerance. 4. Vanguard Total Stock Market Index Fund This fund tracks the performance of indexes investing purely in the stock market, including small-cap, mid-cap, and large-cap growth as well as value stocks. In essence, the investment covers the entire equity market and can yield very high returns. Vanguard’s total stock index fund aims at diversifying the investor’s portfolio and increasing tax efficiency. It is also an affordable investment option for those who want to explore the country’s stock market. Although Vanguard invests only in promising equity avenues, those investing in the Vanguard Total Stock Market Index Fund must be prepared for the risks associated with a pure-equity portfolio. 5. Vanguard Growth Index Fund This low-cost investment option follows a sector-based approach to investment; it invests in stocks of companies belonging to highly promising sectors and industries, such as technology, FinTech, cybersecurity, and ecommerce. This way, if the industry performs as expected, investors are guaranteed very lucrative returns and interest rates. Vanguard carries out extensive research on the most upcoming industries in the country and around the world, so it minimizes any risks of the industry underperforming unless there is a sudden economic crisis. This type of investment is suitable for those with a moderate risk appetite. But, it holds the potential for huge profits. 6. Vanguard Small-Cap Index Fund Today, with the avenues and reach available, several small-scale companies and startups are making their mark in their respective sectors. Vanguard’s Small-Cap Index Fund capitalizes on this trend and invests in small companies that have recently gone public. If a company grows exponentially and becomes highly profitable, investors benefit by a considerable margin. As Vanguard researches well on companies that have the potential to excel, there are fewer chances of incurring losses in this type of investment. 7. Vanguard Total International Stock Index Fund For those who would like to explore the international market, this index fund tracks stock indexes in developing and developed countries across the globe. This is a good option for those with a high risk tolerance looking to diversify their portfolio with an international equity position.  

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