Although real estate seems to be a sure choice for everyone, many investors make the same mistakes. Eliminate these errors in investment activities, and you can accumulate the wealth you want.
Avoid These Mistakes
- Inadequate research. Most of us do a lot of research when planning a vacation or buying a new TV. If you were buying something worth $100,000 you can bet you would do even more research! Well, you should also do that when purchasing real estate.
- Insufficient financing. Real estate investors often like to flip and trade, and their transactions can have many moving parts. Balloon payments, interest-only payments, owner financing, taxable payments, and many more are common.
- To make a deal, we can get carried away by doing our best. Getting a great price does not always justify a transaction if funding is insufficient. Are you sure you can unload the property or get other financing before the balloon’s due date?
- Trying to do the whole thing yourself. While every real estate investor tries to do this at one time or another, you have little chance of success yourself. To achieve your goals of financial freedom, you will need to build a powerhouse team. A great investor will have, at a minimum, a real estate agent, attorney, title firm, inspector, handyman, and insurance agent – all by speed dial.
- You may not always need them, but they should be there, and don’t hesitate to call them if you wish to utilize their services. Make the most of your experts.
- Overpaying. This one is definitely related to doing sufficient research. Property listings primarily sink or float based on price. If you pay too much, there is little that can be done to remedy the situation.
- Investors who are just starting out are more likely to fabricate some numbers in their heads to close a deal. However, if the repair costs are high and the price that can be sold is lower than expected, paying more in the first place may have disastrous consequences. Do research and math and stick to your own realistic numbers based on comparable properties in the area.
- Not estimating expenses accurately. Many investors will consider repairs and think: “Everyone says it will cost $25,000 to repair, but I’m sure it can be done for $15,000.” But what if you really need $22,500? This is part of the reason why getting properties at the right price is so important. You should also get several repair bids from reliable general contractors to aid you in your calculations.
- Another aspect of this error is that all costs are not considered. The costs of lawn mowing, insurance, water and electricity, property taxes, and new equipment will indeed add up quickly. Therefore, develop a practical maintenance plan and carefully record all possible costs.
Real estate investment is a relatively simple business, but mistakes can quickly cause huge challenges. Even the most experienced investor made all these mistakes. Of course, the best investors do them less often than everyone else. There are money-making opportunities in every housing market, so don’t let these mistakes slow you down!
If you would like to grow your portfolio and purchase more properties, talk to one of our management experts to find out how Propertycare can help you maximize your efforts. CALL NOW! (713) 489-7653