What are the common mistakes new investors make?

[Jonathan Sanchez]

I wanted to survey my fellow investors. Looking back at your early deals, what would you say are common mistakes new investors make?

[Steve Morris]

Am a broker so my perspective

1) Not enough reserves.  S*** happens and you do NOT want to feed a property

2) Taking the broker's word it is a good deal.  Get some actual comps and ask about $/SqFt on sales.  I'd say CapRate, but brokers have a tendency to BS those with unreal assumptions (aka ProForma).

3) Get with your lender and go over your situation, he wants it to close as much as you.  He should be able to tell you how to get your house in order.

4) Don't overpay because it's in a quaint neighborhood.

5) Figure a price based on ACTUAL rents and expenses.  Do NOT use ProFormas.

6) Get an inspector and figure your 5 year out CapEx (does it need new siding, roofs, windows, paving, paint). Not a show-stopper, but that should come out of operating income or planned reserves.

7) Drive-by is 50% of tenant applicants.  Does the property have a lot of drive-by or is it on a dead-end and hard to find.  Not a stopper, but you'll need to budget more money/effort/time for marketing vacancies.

8) Basic site issues like grading.  Does surface water run AWAY from the building.  Do storm drains back up.  Does landscape touch the buildings?

DM me, I may have some more.

Not trying to scare you, but to paraphrase Buffett, you make your money when you buy right.