Common Mistakes By Real Estate Investors

Common Mistakes By Real Estate Investors

by Kim Lee

The question will always be which came first the chicken or the egg. In real estate it may be the deal or the plan. Many people make the mistake of finding a great property and then do not know what they are supposed to do. This is where the trouble begins. They have worked themselves backwards into a corner. The idea is to formulate a plan and then find the house which will work with this plan. We are a planning people. We plan for the future, the college education for the kids, and 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.

Planning to get rich quick is another common mistake. The big deals which will net you millions is usually only a dream. Investing in real estate is a slow and steady process. When you proceed at a steady pace, you will keep moving forward towards your goal. You can make money, but being a millionaire over night is stretching the limit. On the 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.

Do not think you can go it alone. There are many people who play a key role in making a real estate deal work. 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. You will need a good real estate agent you can trust to help you analyze the properties. You will want an appraiser and a contractor or inspector to make sure the house is worth the investment. You may even need a lender once in a while. The most important part of the team is the attorney who is going to make sure there are no hidden surprises which may crop up at any point in the deal. This is not a loner business.

This is not a business with a single strategy either. You must have a plan A, B, and C. On occasion it does not hurt to have a D in the mix. You may want to buy a home and resell it. The housing market changes quickly. If you can not get it ready for market in time to sell for a profit, you may consider renting. There are times when the rental market becomes void, or stalls. When this happens you could offer a land contract or lease option to get rid of the property. There may come a time when the only thing you can do is sell to another investor and cut your losses before you lose any more money. The wise investor also knows when to bail.

The common mistakes made by the inexperienced investor can be avoided with a little research and planning. When you decide to start investing in real estate, learn the business. There are many books available which can teach some of the strategies the pro's use. There are seminars, many of them free, which allows you to learn how to invest. Study up and make smart decisions when it comes to real estate investing. This way you can avoid common mistakes investors make.