Some of The Biggest Mistakes Investors Make in Real Estate

[Account Closed]

Okay, not all of the mistakes, just some of the biggest.

1. Asking for legal advice on Bigger Pockets. It’s an investment site, not a legal site.
   1. . You are better off asking at AVVO.com or LEGAL.com
2. Assuming every answer you get is accurate
   1. Well meaning people can give some pretty bad advice, because they don’t know it’s bad advice
3. Never making a decision
   1. Investing means taking action, it’s a participation game. Find someone you trust and build a relationship, sometimes it speeds things up by a year or two to pay for training
4. Never asking your questions. .(This is for you lurkers out there) ;-)
   1. We were all new at one point. We made the mistakes so you don’t have to.
5. Not selecting a path to take
   1. If you have no money, that’s okay. You can still learn investing
   2. Team up with someone that does have money and become their assistant
   3. If you have a lot of money and no time, either look into syndications or find someone who buys properties for people who have no time, like us.
6. If you want to do Subject To
   1. Have about $30,000 available liquid cash
   2. It is Not “no money down”
   3. Borrowing from others to cover the costs for doing Subject To has serious legal consequences and is extremely risky for you, your 2nd position lender and for the seller
   4. It is easy to do the contract (Transaction) for Subject To, but it is very hard to do the next few years correctly. That requires guidance
   5. If you are a lender, the worst loan you can make is in second position on an over leveraged Subject To for someone who has no money. Do not expect to get your money back.
   6. I just heard that some are forging Proof of Funds or using other people’s POF. That is likely mortgage fraud, bank fraud and wire fraud as defined by 18 U.S. Code Chapter 47 - Fraud And False Statements, which is a very boring read, unless it applies to you.
   7. Please don’t do that.
   8. Make sure your Proof of Funds source has the funds and that you are authorized to use those funds and the source will vouch for you in court.
7. If you are going to buy “Turnkey” it is recommended you visit the actual neighborhood and actual house before closing.
   1. Things can be very different in person.
   2. Afterwards is too late.
   3. You may not like what you see
8. Go with the Math, not the emotions or hopes of the future
   1. If you are losing money with the hopes of making it up later, you should seriously reconsider.
   2. Wishful thinking is a poor investment.
9. Interest rates are going up
   1. And interest rates are going down.
   2. And interest rates are remaining the same.
   3. There is no clear direction for rates and there are arguments for going each direction – buy so that your property cash flows, even if you are wrong.
10. Ignoring your workers.
    1. Always serve your workers pizza on the job.
    2. It keeps them on-site so they don’t wander off
    3. They will think you actually care and will work harder
    4. You get to become “one of the boys” and they will tell you things you need to know

Hmmm, out of space, but not out of mistakes.