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It was about the same time around two years back when I narrated the do’s and don’ts for a real estate investor. The list was mainly focused on the first-time investors in the Dubai real estate market.
Here are a few more do’s and don’ts mainly focused on investors who are in the trade and want to take it to a level of sophisticated investing and getting it right every time all the time.
1) Do not try to time it perfectly – There is no one who has timed the peak or the bottom, but the trick is in pacing yourself.
Always put low offers out there when less people are buying.
Chances are that you will get one deal out of eight, which will be at a price which you know will not be beaten in any market condition.
As far as you know the current trading prices perfectly, you will also know what prices will give you cushion in case the market falls.
When the market gives you more time, do more research.
Do not waste your time just chatting about stories of a bad market or a coming doom.
2) Do not follow the herd – In a seller’s market, be a seller; and in a buyer’s market, be a buyer.
Yet you still wonder how majority of the people always end up on the wrong side of the table.
Usually, the majority follows what their friends are talking about, or what the “market” is talking about.
This jeopardizes individual judgment. Market information is essential but judgment has to be individual.
3) Do listen to your gut feeling – Always follow your gut feeling. Sometimes it just feels right, and sometimes the most lucrative deals also just do not seem right.
All great investors master the art of listening to their gut.
4) Do make your balance sheet – This concerns liabilities, contingencies, current cash flow and future cash flow.
Any good investor knows exactly how much exposure he has at any given point in time in the market.
He is also very clear about how much his appetite is for more exposure and what his worst case scenarios are in order to not get crushed for cash.
There is nothing worse than having to sell your most prime assets for cheap because you need cash to pay for bad assets bought without thinking through.
5) Do not sit and wait – Not doing anything is better than doing something and losing money. But doing something and making small money or even no money is better than not doing anything.
This is simply because opportunities will stop coming if you are out of business for some time.
6) Do your study quickly and completely – The good thing about a slow market is that it gives you the chance and the time to understand all angles of a deal.
Do not miss out on that opportunity by analyzing endlessly.
On the other hand, do not also take blind calls as people usually do in a very buoyant market.
Be swift, but thorough.
7) Do not release a victim to become the victim yourself – Make sure that the deal that you get into is not meant to release someone from the situation he is in because of that deal itself.
It is alright to get into deals which change positions for all parties.
It is also fine to get into deals which are meant to give relief to a party due to his issues elsewhere.
But be very careful; do not buy a bad deadlock deal and be in that deadlock yourself.
In the end, remember to be positive in your head, but conservative on paper, and that attitude alone will take you far in real estate investing.
Source: Ashirwad Somani, Managing Director, Candour Real Estate