Real Estate Investing Mistakes You Want to Avoid

When investing in real estate there are many moving elements; therefore, many costly mistakes can be made. In fact, even experienced, savvy investors still make mistakes or have had to overcome challenges in their investing careers. The good news is that with some education you can recognize, avoid, learn and move forward from these potential disasters.

7 Key Mistakes Rookie Real Estate Investors Make.

  1. Never Speculate – Most      new investors follow the herd, (this is the blind leading the blind). Do      not listen to the media and buy hoping the property will appreciate or      some new development will come along and increase value. This is as much      of a gamble as hand picking stocks or going to the Casino…..Trust me I      have spent many years in the casino industry as well as the real estate      industry. Always buy below market properties that cash flow. Be sure to do      your homework and buy in economically strong areas.

 

  1. Don’t Buy      at Market Value – Beginners almost always buy property straight      off the MLS for market value. You can find deals in any market and there      are always distressed properties. You need to shop around; there are many      sources to find great deals. Be like Wayne Gretzky and cherry pick (Hockey      reference for the Gretzky fansJ) from distressed properties at      75% or less of market value.

 

  1. Do not      fall in love with a deal or get your emotions involved – Save      LOVE for your relationships! There is no room for emotion when it comes to      real estate investing. Many beginners are guilty of this one. Their first      few deals they spend minimal time finding a deal. As soon as a prospect is      located, they fall in love and do anything to get that property. Emotions      drive the decision, instead of making an informed business decision. The key      is to get as many prospects that fit the criteria into the pipeline,      filter out the duds and buy only the best deals. Always ask yourself….” will      this investment bring me closer to my desired goals?”…..If the answer is      YES …move forward.

 

  1. Rookies      put too much down or too much of their own money in – Real      estate is an “OPM” or Other People’s Money industry. You should minimize      how much of your own money is in a deal. And always make sure you have      plenty of reserves to handle any repairs, renovations, or surprises that      may arise. Factor those costs into your purchase before making a final      decision.

 

  1. No real      exit strategy – To minimize risk, it is imperative to have      multiple exit strategies. In real estate there are many exit strategies;      depending on your goal you should be well educated on them all. You do not      want to ever fall behind in payments and lose the property and your      credit. Instead, buy below market properties that cash flow. That way you      can sell retail, wholesale, lease option, seller finance, refinance, even      rent and hold: just to name a few.

 

  1. Buy in      Warzones – Everyone wants to buy property at a deep      discount. In many markets you can find huge discounts in many areas. Do      your due diligence. Buying a property for 50K worth 90K sounds like a      great deal, but not if the property is vandalized multiple times during      repairs, surrounded by 20 other “power of sale” properties and there is      next to zero interest from renters or buyers due to the location. Make      sure there is strong demand from renters and/or ownership in the area      before you invest your hard earned money!

 

  1. Most      rookies never consult an expert or build a team – Many      people are do-it-yourselfers (myself included. BUT I learnt my lesson) and      cannot fathom the idea of another person giving them advice or handling      tasks. Real estate can be very passive if you build a solid team and many      experts are more than willing to give you advice that could significantly      impact your success and experience as a beginner. Do not be like me and      learn these lessons the hard way!!! You will pay either way…..either for      education or the much more expensive way…..from the school of hard      knocks!!!

Many professional investors make real estate investing sound so easy……News flash, it is NOT!  Real estate investing is not a “get rich quick” investment. To be successful you must be willing to commit your time and some hard work!

Many rookie investors make one, even all of the above mistakes and have a miserable first investing experience. Whether you are a rookie just beginning your new adventure or an expert, it is always important to get as many educated opinions as possible. They will make you aware of many potential mistakes, challenges, and red flags. Always do extremely thorough due diligence. If you are willing to put in some work, get educated, and build a great team. Then you will be well on your way to a successful real estate investment career.

So…Are you ready and willing to do what it takes to be successful? We will see. Leave a comment below