Real estate as a way to build wealth is a great idea—but only if you don’t make these common real estate investing mistakes.
1. Not doing enough research. Real estate investing success is not just about “location, location, location.” You need to know the area, real estate trends, market needs, realistic renovation costs, costs of holding a property during renovation, financing, a viable exit strategy, and so much more.
2. Financing mistakes. It’s easy to ruin a great deal with poor financing. Don’t get sucked in by fancy lender-speak. Know exactly what you’re paying—and what your exit strategy will be!
3. A DIY approach. Nobody knows everything about everything, and nobody has time to do everything on their own. We all need a team of experts. In real estate, this means (at a minimum) a real estate agent, inspector, title company, handyman, attorney, insurance agent, and general contractor.
4. Overpaying. This is a result of failing to do research. Do your due diligence and don’t let emotions sign a contract. Stick to your numbers. This is business!
5. Poor estimation of expenses. This is also a result of failing to do research. Factor in the fact that most repairs and renovations will go over budget due to unforeseen circumstances. You must also factor in “hidden” expenses such as utilities, trash collection, new appliances, property taxes, lawn mowing, and landscaping, to name just a few.
Every seasoned real estate investor has made one or more of these mistakes. In fact, even the best investors continue to make some—they just make them less often! Learn and profit by avoiding these common real estate investing mistakes.