Getting into the real estate industry is a profitable financial venture for all who want to build a steady cash flow. However, there are some real estate investing mistakes unsuspecting investors tend to make, which are costing them greatly.
Real estate investing can bring you fortune. No one can deny that. However, if you’re not careful, you can make some wrong steps that could harm you financially, maybe even end your business before it properly starts. Here are some common real estate investing mistakes that you should avoid.
#1 Spending Thousands on Books and Seminars, then Never Using that Knowledge
Before venturing into this industry, you have to know the basics of it. That’s a fact. Many people pay a tedious amount of money on various investing books, tapes and seminars, thinking that this will, by default, make them superior. However, if you never actually spend time doing research and implementing that new knowledge, this will be a waste of money. You have to use every new skill and tactic you learn about. Just having a certificate or a bunch of books in your shelf won’t make much difference.
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#2 Taking on a Seller’s Mortgage
A lot of investors think that simply taking on a seller’s mortgage is a great thing. Many homesellers will opt to sell their house to investors as traditional buyers can’t take their mortgage just like that. Well, this is one thing the traditional buyers got right. Taking upon a mortgage means that you still owe money to the bank and that your credit is affected. This isn’t a good idea and it’s among the biggest real estate investing mistakes you can make. Unless you’re really keen on that particular property, always try to find houses you can purchase in full. This is one issue less in the future.
#3 Impulsively Buying Properties
If you’re just starting, it’s normal to fall in love in the first property that a seller offers you. One of the most common real estate investing mistakes is to impulsively buy a house because it looks ‘nice enough’, without looking at other properties on the market. Often times, you can find a better property after just a little bit of research. This doesn’t mean that this property is necessarily bad; often times, it really isn’t. You have to look at more than one offer, though, so you can make a choice that works financially for you.
#4 Not Buying the Right Property when You Had the Chance
This is the opposite of the previous one. Some investors keep on refusing good deals, expecting the perfect one to be just around the corner and they just have to wait. If you waste too much time expecting a great deal to appear out of nowhere, you should know that this almost never happens. You shouldn’t miss out on good deals just because you expect something that is probably not realistic.
#5 Not Brining in Enough Leads
One of the most important aspects of real estate investing are leads. Without leads, you can’t make deals. Not only that, but you should ensure you always have a consistent flow of leads that you might be ready to invest in. Keep in mind that bringing in too many leads at once can become troublesome. You should always ensure to bring one lead at a time at a steady basis, so you have the time to dedicate to them. At the same time, you should always make sure that you pre-screen all your leads. Wasting money on bad leads is another of the most common real estate investing mistakes people make. You should always ensure you have enough information about every lead so that you are able to create a win-win solution. Otherwise, the lead might fall through.
#6 Not Creating an Exit Strategy
You’ve made the deal, you’ve purchased a house, and then you’ve realized you’ve made a mistake and this property is only going to waste your money – or, perhaps, you have no idea how to create profit of it. This is why it’s important to always have a good exit strategy, just in case. Before creating a deal, you have to know what you want to do with this property. Whether it’s flipping, rehab, rent, wholesale, you have to have a plan. In other way, you will most likely end up losing money.
#7 Wasting Time on Unmotivated Sellers
Going after off-market properties is a smart idea, as you can purchase houses at an affordable price, with a little to no competition. However, if a seller isn’t motivated to sell, you are most likely wasting time. Not only can you end up wasting weeks negotiating with a person who never intended to sell, but even if you get the deal it probably won’t be good for you and your finances. Motivated sellers are usually in a hurry to sell their home and they are prepared to make an agreement with the buyer.
#8 Believing You Can Become a Millionaire Overnight
This is one of the biggest real estate investing mistakes people make, which leaves them demotivated. Real estate investing can make people rich, however, money won’t just fall from the sky. Otherwise, everyone would do it! This doesn’t mean the stories are false, on the contrary. Becoming successful in the real estate industry takes time, just like any other ambitious business. You have to invest a lot of time, hard work and sweat to make it. But you can do it! The most important thing is to be patient. Profit will come to those who can wait and plan ahead.