.jpg "Common Real Estate Investing Mistakes")
Although real estate may seem like a sure bet for
anyone, many new investors make the same few mistakes. Eliminate these errors from your
investing activities and you'll be well on your way to accumulating the wealth
you desire.
Avoid These Mistakes
1.
Poor
research. Most of us do a lot of research when we plan
our vacations or purchase a new television. If you were buying one that was
worth 100k, you can bet you’d do even more research! Well, you should be doing
that when you purchase a piece of real estate, too.
2.
Inadequate
financing. Real
estate investors frequently like to wheel and deal, and their deals can have a
lot of moving parts. Balloon payments, interest-only payments, owner financing,
subject-to, and many others are commonplace.
· To
make a deal happen, we can get carried away doing everything in our power.
Getting a great price doesn’t always justify the deal if the financing is inadequate.
Are you really sure that you can unload the property or get other financing
before that balloon payment comes due?
3.
Trying
to do everything yourself. Though
every real estate investor attempts this at one time or another, you have
little chance at success all by yourself. A great investor will have,
at a minimum, a real estate agent, attorney, title company, inspector,
handyman, and insurance agent – all on speed dial.
- You may not always need
them, but they should already be in place, and you shouldn't hesitate to
call them if you do want their services. Use your
experts to your full advantage.
4.
Paying too much. This one
is certainly related to doing enough research. Real estate deals primarily sink
or swim based on price. If you pay too much, not much can be done to rectify
the situation.
· Beginning investors are more likely to
mentally fudge the numbers a little bit to make a deal happen. But if the
repairs run high, and the price they can sell for is lower than expected, then
overpaying in the first place can be disastrous. Do your research and your math and stick to your numbers.
5.
Not estimating expenses
accurately. This is similar to paying too much. Many investors
will look at repairs and think to themselves, "Everyone is saying it
will take $20,000 to fix, but I'm sure I can get it done for $14,000." But
what if it really takes $23,500? That's part of the reason getting the property
at the right price is so important.
- The other aspect of
this mistake is not accounting for all expenses. The costs of landscaping,
lawn mowing, insurance, utilities, property taxes, and new appliances can
really add up in a hurry. Be realistic with your repair planning
and take careful notes of all your possible expenses.
Real estate investing is a relatively simple business,
but mistakes can create massive challenges in a hurry.
Every seasoned investor has
made all of these mistakes. The best investors just make them less often than
everyone else. In any housing market, there are moneymaking
opportunities, so don't let these mistakes slow you down!
