When getting started in any industry, success isn’t going to come overnight, and the same can especially be said for getting your start in real estate investing as well… you’re not going to become an expert investor overnight. To become successful as a real estate investor, it’s going to require extensive research in the industry as well as determination, strategy, and skills. In addition to that, you’re going to really benefit by learning the mistakes that other investors have made in the past to help you avoid making those very same mistakes.
If done right, real estate investing can indeed be a lucrative and profitable endeavor with a great return on your investment, but understand that it means making sound and wise decisions. Take a look at the mistakes of previous investors to avoid the costly missteps they made in the past.
Real Estate Investing Mistakes to Avoid
Failing to Make a Plan For Your Investment
This mistake is probably the worst mistake you can make because you’re setting yourself up for failure before you can even begin. Investing in a property and not knowing how you want to utilize it is basically real estate suicide, especially if you have a mortgage you’re already paying for the house you’re currently living in.
Unless you’re sitting on thousands on thousands of dollars, you more than likely will need to apply for a short-term rental loan or a long-term one, meaning that once you’re approved and receive the financing, you’re going to have to pay that money back over the course of your leasing term. Time wasted on trying to figure out your property’s purpose is money you’re not earning to repay the loan, which could prove to be financially devastating if you don’t figure out the purpose really soon.
Failing to Research and Visit the Property You Invest In
This particular mistake is one that investors make when they live out of state. This is a common mistake simply because out of state investors want to invest in properties in a cheaper market. While this investment strategy is good, it’s not a wise decision to make if you can’t travel to the city or town you want to invest in to actually look at different properties.
Sure, you can do your initial research on the internet (make sure your research is done on a credible website) but if you don’t have the time to go see the properties yourself, you don’t need to invest. There are just too many risks involved.
You might see a property online, invest in it, and soon find out that it’s located in an area with one of the city’s highest crime rates. You don’t have the option to reverse the deal or switch locations, so it’s important that you conduct thorough research on the city and the neighborhood to make sure you’re not investing in a home that’s considered a burglary hotspot.
Not Checking the Condition of the Property You Invest In
Remember, you can’t trust what you see on the internet and you can’t just take the word of the seller. If the seller says the house is in great condition with minimal repairs needed, ask to see a copy of the home inspection and estimates for the various repairs needed. If the seller can’t provide that information to you, it’s because they never got the house inspected in the first place or because the entire listing is a scam in itself. This ties into the above mistake of failing to research and visit the property.
Overpaying For Your Property
When embarking on your real estate investment journey, it’s common to get overly excited and anxious when you find a property you love. When this happens, overly anxious investors tend to overbid on properties just to ensure the seller accepts their bid. This can create a world of problems.
You have the potential to overextend yourself financially, causing you to take on debt that you can’t afford. The key to success here would be to research the comp prices of other homes in the area to make a fair bid. The best way to do this is to consult with a real estate agent in that area to give you the comp prices and to help you determine a fair offer.