One of the commonly misunderstood phrases used all over the world that many have adopted is ‘experience is the best teacher’. Should an individual dip his or her hand in boiling oil to experience how it feels? I guess you’ll laugh at such a thoughtless action but how many more people jump into important decisions without understanding the nitty-gritty. In real estate, don’t learn how not to do things the hard way (by personal experience) learn from the experiences of others. Today, I avail you of pitfalls to avoid if you desire to make big bucks in real estate.

Starting without a definite goal. There are several angles to real estate investment and it would be disastrous to plunge in without a goal. Are you thinking of income generating aspect of real estate? Are you planning on building your first house? Are thinking of your retirement? Are you thinking of an asset that could be used as leverage to access funds for other purposes? Whatever your goal, there is a real estate vehicle that can help you reach it.

Buying a property because it is cheap. Of course, we expect you to take advantage of bargains but that should not be your sole reason for buying a property. A real estate investor must distinguish between price and value. Value is more important than price. Value is what determines the level of appreciation your investment will enjoy and whether or not it will meet your predetermined goal.

Many years ago, a business woman I know, decided to invest in real estate in order to have a property that could be used as collateral to access soft loans from her bank. Although her goal was clear, she lacked an understanding of the difference between price and value. Although she could afford some of the best places in Lagos, she bought land in one of the cheapest areas close to a densely population and infrastructurally deficient area. She built a storey building and presented it to the bank for valuation. Her greatest shock was that the value given to her property was so low that she could not even access any significant sum of money. She was looking at price. The bank was looking at value.

Evaluating a property alone without regards to its overall environment. This is a common mistake. For instance, in buying a parcel of land in a waterlogged area, your ability to construct a building with very good foundation will not exempt you from the challenges of the environment except you are going to use an helicopter to get to your house whenever there is a flood. So, look around the area to determine things that could add or remove value from the property you’re buying or the area you’re seeking to buy into.

Being hurried into a purchase without conducting an investigation. More often than not, agents who are marketing a property for sale are not professionals and are only interested in the commission they will be paid.

Shuch agents often will put undue pressure on a purchaser to hurry because someone else has already written a cheque in the sellers favour and may get there before you. While we are not encouraging undue procrastination, due diligence must be conducted before you pay for any property. Investigate. Be sure you’re buying from the right person.

Parting with money without collecting or signing all the necessary documents. Often, the best time to get a seller to sign any document for you, is at the point of payment not after. Once money has changed hands, most sellers will not make your interest a priority. They are either too busy or unavailable. Some may even demand additional money before signing any other document for you. Engage professionals and make sure the requisite documents are signed at the point of payment.

Failure to perfect the title to your property. It is always amazing to me to see people eager to buy property and eager to build but not eager to perfect the title to the property. Many spend millions to build houses on lands with little or sometimes no documentation. This to me is being penny wise and pound foolish. If your title is not properly perfected and there is an issue on the land in future you could lose all your investment in the land. If you do not perfect your title you will not be able to leverage your property to raise funds from banks should the need arise in future. In addition, you lose a significant amount of value when the titles are not perfected.