What is a rookie mistake people make on their first investment?

In my opinion, the biggest rookie mistake new investors make is paying too much for the property.

You need to back your way into the price. Knowing what a house will sell for fixed up or if it is a buy and hold, what it will rent for, is the most important number you need to make your decision.

The next most important number is the rehab cost.

Once you know these numbers then you know what you can pay for the property.

Most seasoned investors agree that you should never be in a house for more than 70% of the after repaired value (ARV) and you want to make sure your rent is 110% of the all in cost.

You don't have to be a theoretical physicist like Sheldon to figure it out.

Here are the formulas:

Fix and Flip: ARV x 70% - rehab = purchase price.

Ex: 150000 x 70% = 105000 - 30000 (rehab) = 75000 purchase price.

Buy & Hold: All in price or purchase price (if no rehab) x .011 = rent

Ex: 80,000 x .011 = 880/month rent. Is that rent comparable to nearby rental properties?

Now that you have those basic formulas, use them to work your numbers on every potential deal. Don't lose money on your first deal when you don't have too!