Have you ever wondered why some real estate investors are so successful, while others seem to run into roadblocks at every turn? Well, it’s quite simple. The successful real estate investor knows the ins and outs of his business and always makes sure not to put the cart before the horse. He knows all the pitfalls that exist in the world of investing and he knows how to avoid them. Here are some of the biggest mistakes investors make. (You can read about more mistakes here)
Finding a great property without having a plan. You should never look for a deal before you have a plan. Many excited investors will go out and find a great property and not have any idea as to what they should do next. This is where investors run into trouble. They have painted themselves into a corner without a plan of how to get out. In order to be successful you will want to make sure you have a plan and then go out and find just the right house that works with your plan. We are a world of planning people. We plan for the future, for our kid’s college education, and for our retirement. When it comes to real estate it only makes sense to plan for that too. Sometimes the novice investor gets ahead of themselves and forgets to draw up a plan. Deciding what you want to do in the real estate market will determine what houses you buy and how you sell them. It is best to always have a plan.
Investors always seem to plan on getting rich quick. While this may sound great, getting rich quick is nearly impossible. The big deals which will net you millions are only a dream. Investing in real estate is a slow and steady process, not something that can be accomplished overnight. When you proceed at a steady pace, you will keep moving towards your goal. You can make money, but being a millionaire overnight is stretching the limit. On average, a good investor can make $60 to $100 thousand a year with proper real estate investments. This strategy allows for a steady forward progress and takes into consideration that not everything will go as planned. You must keep real estate investing just what it is REAL.
Investors assume they can go it alone. Don’t ever assume you can do everything yourself. The smart investor has a team of specialists who assist him or her. Even they may not know they are part of a team, it is a team all the same. This is not a loner business.
Some of the most important members of your team should be:
-A good real estate agent that you can trust to help you analyze the properties.
-An appraiser and contractor or inspector to make sure the house is worth the investment.
-An attorney who will make sure there are no hidden surprises which may crop up at any point in the deal.
-A lender may not be needed for every deal, but it is nice to have one on your team that you know you can trust.
The belief that it is a single strategy business. Just because you have a plan, does not mean that will be the plan that will work on every single one of your deals. You must have a plan A, B, C and even a D.
Some examples of reasons why it is good to have different plans are:
-When you want to buy a home and resell it.
-Renting a property if you didn’t have the time to prepare for the housing market change.
-Offering a land contract or lease option to get rid of the property if renting is no longer an option.
-Selling the property at a loss to cut your losses before you lose any more money. The wise real estate investor also knows when to bail.
Now that you know some of the most common mistakes in real estate investing, the easiest way to avoid them is with a little research and planning. Make sure you take the time to learn the business before you start purchasing properties. There is a wide range of tools available to the novice investor from books to seminars that can help you learn the ins and outs of the business of real estate investing. Arm yourself with knowledge and you will save yourself from being another victim of the common mistakes investors make.