Most people get close real estate investment the wrong way.

For most people, the way to invest is to buy a vacant lot or a house and a pre-sale lot or condo. This is not bad in itself, but it is bad for most people for the following reasons.

1. Buy a property and then wait for it to appreciate
2. Buy a property without control
3. Buying a property without a clear plan and strategy

Mistake #1. buying then waiting

People buy vacant lots in the hope that the lot will increase in value. They look for vacant lots that they can buy, pay for them, and then wait. You could end up waiting a long time because appreciation is not automatic like many real estate sellers would have you believe.

This is called the buy and wait strategy. You buy and expect it to be appreciated.

Yes, real estate normally appreciates with inflation. I’m sure you’ve heard stories of her grandparents who bought a vacant lot for Php1 per square meter and then sold the same lot for Php1,000 per square meter. But sometimes you have to wonder how that happened and how length I take. If he took 20 years, then he must wait the same amount of time before he starts thinking about selling his lot.

Real estate appreciates not only through inflation but also through changes in area. Suddenly I could appreciate if YE I suddenly bought the lot across the street and built a new shopping center.

The government could suddenly decide to turn the surrounding area into a development hotspot by building the infrastructure near the area and encouraging businesses to invest.

The city or area where your lot is located experienced a economic boomand the demand for real estate increased.

Also, these are all external factors that you cannot control. The only time it makes sense to buy a vacant lot is if you already have a plan to use it or if you have reliable information about developments in the area. You are not basing your decision on hope but on correct information.

Of course, if your lot is located in the mountains or in the middle of rice fields, far from developments, you won’t reap the rewards.

Mistake #2. buying without control

The other common way people invest in real estate is to buy a house and a lot or a condo in the pre-sale stage. At this stage, the down payment can usually be spread out over a period of time, making the acquisition affordable.

If you’re going to live on the property, then it’s perfectly fine. It is better if you buy it before so that you can secure the property at the lowest price and best conditions.

Developers typically increase the price of presale projects by up to 10% each year until the project is complete. This price increase depends on market conditions: the higher the demand for units in that project, the higher and more frequent the price increase will be.

If you buy a pre-sale property in the hope that you can sell it later at a higher price, you are again putting yourself in an uncertain position. You are making a series of bets out of your control.

You are betting that the developer will complete the project on time. Many developers do not deliver on time. Some also force rotation even though development is not yet complete.

You are betting that there will be a buyer for your property at the time of billing. What if there is none? What if there is an oversupply of condos in the area?

You are betting that the quality of the development is the same quality that the agent showed you in the showroom. The showroom is just that, a show. It is not the finished product.

This post is not intended for garbage developers. In fact, there are some that actually build quality work and actually have resale value the moment you get it.

This is not about developers, but about you, the novice investor.

The developers have a clear plan and strategy. The same cannot be said for new investors.

Mistake #3. Buy without a clear plan and strategy

Many people simply go by what they have heard or seen others do. That’s why so many people buy lots because they heard a story from someone else.

Many people listen to sales pitches, not knowing the difference between a sales pitch and a sound investment strategy.

Every business has a plan to separate you from your money. Your business is to make sure you keep your money.

The right way to invest is to treat real estate like a business. Any successful business has a good business plan that is based on facts and not opinion or guesswork. A good business plan has clear action steps, firm goals, and has control over most of the factors that will affect the business. Have backup plans if things don’t go as planned.

I repeat, the key to a successful real estate investment is to treat it like a business. It is not a place to just park your money. It is also not an asset that will automatically grow or automatically give income. You have to treat it like a business and set it up like a business.

Now, is it still possible to run a real estate business in your spare time? The answer is still yes.

In my next post, I will share the first step to establishing your real estate business. innuendo. It is not establishing your corporation.