Beginner Real Estate Investor Mistakes to Avoid

[Agostino Pintus]

Making the decision to invest in real estate is often one of the best financial decisions people make in their lifetime. However, not all investments are good investments. There are many things to consider when buying an investment property. Here are the beginner real estate investor mistakes to avoid.

The first mistake many prospective real estate investors make is not knowing what type of property to buy or strategy to follow. Many people are unsure of which market, or property type to buy. You can buy local, or out of state. You can invest in single-family or multi-family homes. Knowing what you are looking for is important to finding a good deal. Once you narrow down your search it will be much easier to know when you’ve found a good deal.

Another mistake novice real estate investors make is not having the right team in place. For a property to run smoothly you will need a team of people who can manage and repair it. If you have the time or are particularly handy, you might do some or all of this work yourself.

However, unless you are a licensed electrician, plumber, and carpenter, you will have to hire people to work on the property from time to time. Therefore, take some time to find a solid team to help you run your property. Searching on Google and reading reviews can be a good way to start. Also, if you know anyone who owns or invests in your target market, reach out to them and see if they can recommend you to someone.

A big mistake that many new investors make is not thinking long-term about their investment. The cost of buying and selling properties is expensive. So unless you are a professional house flipper, planning to hold onto the property for a while is usually a good idea. Buying and holding gives you the advantage to steer the property in the direction you choose. Do you want to make more cash flow each month? In that case you might want to consider upgrading the property so you can raise the rents. While this might cost you quite a bit in the short term, long term it will pay off as you are able to increase your rents. Furthermore, the longer you own a property, the higher your equity will be as your tenants pay down your loan. Adding to that is the fact that real estate typically increases in value over time due to appreciation. These are some of the factors why real estate investors should think with a long-term goal in mind.

The final important mistake that new investors make is skimping on the due diligence. There are a lot of different factors to consider when selecting an investment property. Knowing if the taxes are paid up, if the area is in a flood zone, or if there is ongoing construction nearby will be helpful in deciding on buying a property. Getting a home inspection is highly recommended to ensure that you are making a sound investment.

Be Bulletproof,

Agostino