Top mistakes when investing in real estate

May 22, 2017, 5:01 p.m.

The real estate sector in Cambodia has such a large scope, and like in any other place investors can run into pitfalls or hit major roadblocks along the way. But what is the difference between investors who prosper and investors that flop? While some attribute luck as the main factor, it’s actually an investor’s skill and ability to avoid making mistakes that carry them through.

That’s why Realestate.com.kh made a list of top mistakes investors make in Cambodia. So that you can learn how to avoid making the same ones!

Not researching enough

A strong athlete will be remembered throughout history, but a smart athlete survives it. In the same way, investors with great resources can start out strong, but longevity comes from research. 

Let’s say you make an investment in Phnom Penh because you’ve seen businesses thrive there for years. For the first few months, your investment may do well. But since you didn’t study the investment climate of Cambodia and the projections from experts, you might have missed out on news snippets stating that Sihanoukville is garnering lots of interest as well. And while you’re successful in Phnom Penh, Sihanoukville may have been a better option for your investment type.

In an interview, Director of Business Development at VTrust Appraisal In Sitha echoes this sentiment. He says, “The most common mistake that the property developer makes when entering the Cambodian market is moving too fast. Before starting any project a feasibility study is crucial. And they need to get recommendations from professional real estate agents.”

Reading up a bit won’t hurt. But if you still have some concerns, it would be better to bring in a professional from the industry.

Trusting Too Much

Speaking of real estate professionals, there are plenty of them in Cambodia. But since the country’s economy and policies are still on its early evolution phase, there are still a number of con artists out there too. If not con artists, self-professed agents who know nothing about the market. So, part of doing your homework is checking the credibility and reputation of the people you deal with.

Don’t get us wrong, just because professionals don’t have websites doesn’t mean they’re a scammer. But just because they have websites too, doesn’t mean they’re professionals. So, instead of going to independent agents or sketchy agencies, try heading off to recognized organizations first, like EuroCham, BritCham, and the Cambodian Valuers and Estate Agents.

They’re most likely gonna have both the information you need and the connections you’re looking for.

For more information on common scams in Cambodia, visit our Scams to Avoid Guide
Not preparing financially

This has got to be the biggest mistake investors make. Just because you have tons more left on your bank account after your property purchase doesn’t mean everything’s been paid for in full. Like in other countries, Cambodia also has its own special set of taxes and after-sale maintenance you need to pay for. These include the transfer tax, the annual property tax, withholding tax, fees like a public service charge for setting up a limited liability company. And don’t forget the utility bills and the insurance.

Some investors think spending ends after the purchase of the property. In reality, that’s exactly when expenditures begin. This is why proper allocation of funds will get you far into the market because you know exactly how much you have, how much you’re going to spend, and how much you can potentially make as profit.

To learn more about processing fees, taxes, and other expenses, check out our Ownership Guide now!

Much like in other situations “Just because you can doesn’t mean you should.” And that’s exactly how investing goes. Taking a risk has to have its fair share of research, insight, and merits first. Without them, you might just find yourself in murky waters. This list of top common mistakes by investors should give you an early advantage. But remember to always keep yourself updated so you can adjust accordingly too.

Want to learn more? Check out other great resources on Realestate.com.kh now! Go to our Location Profiles and Investor Guides pages for more information!
 
Looking for real estate for rent in Phnom Penh? Or want to read about critical tips for prospective lessors? Check out Realestate.com.kh

 

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