What is a potential consequence of overlooking depreciation in property investment?

Overlooking depreciation in property investment can lead to overestimating the property's current value, which is significant for several reasons. Depreciation reflects the reduction in a property's value over time due to wear and tear, age, or obsolescence. When an investor fails to account for this depreciation, they may inaccurately perceive the property's worth as higher than it actually is. This misconception can impact various decisions, such as pricing the property for sale, assessing its rental potential, or calculating investment returns. By not incorporating depreciation into the valuation, the investor may set unrealistic expectations, leading to potential financial losses or difficulties during resale.

In the context of the other choices, while underestimating renovation costs, failing to keep historical sales records, and ignoring legal regulations can also lead to negative outcomes in property investment, they do not directly stem from neglecting the aspect of depreciation. Thus, focusing on how depreciation influences valuation highlights its critical importance in making informed investment decisions.