Common Errors Made by Real Estate Investing Beginners

New real estate investors make the same type of mistakes that any new investor makes in any field. Their ignorance always wins in the beginning unless they are just lucky. The solution to learning how to invest is to get burned a time or two.

New investors do little research before leaping into the fray. This will almost always get you eventually. You may get lucky once or twice, but your overconfidence from those efforts will only make you more likely to make a bad choice next time. New real estate investors need to take the time to check the market in the area they are choosing to invest.

Is it a private home? Maybe you are looking at rental property. Is the property a commercial investment? Each type of real estate carries its own risks and idiosyncrasies . You need to check them closely. Take the time to get educated about the investment you are looking into. You may even miss an opportunity while learning. This is better than losing your shirt on a bad deal.

New investors are often under capitalized. Run the numbers. Make sure that you won’t get yourself too strung out financially. If you run it too close and it doesn’t pan out, can you afford to carry it for a few months to unload it? If not, keep out. Again, it’s better to miss out than go bankrupt.

Not checking out the property itself correctly can lead to huge problems. If you buy it for a song, make sure you won’t have to pay the piper later. Most low cost property is cheap for a reason. Learn enough to know why. You may choose to proceed, but you will be informed.

Unless you’re buying a home for yourself, don’t invest money that you can’t live without. Many investments make little or lose money. Even those that make money, often only earn a few percent when annualized. If this is a get rich effort, only use surplus money. You want to be able to walk away if it fails with your life intact.

Real estate investors like every other investor need to know how to sell right. Don’t become too sweet on your investment. It’s only a family friend if it makes you money. Try not to be too greedy. When you are at a place to take a reasonable profit, take it. Every investor has failed to sell and watched a good profit descend into a loss. Don’t be one another one.

Share this article:

Leave a Comment