It does not matter whether you are a beginner real estate investor or an experienced one, you can still make mistakes. In fact, mistakes are a given for everybody. So, what are the most common mistakes investors make in real estate investments?
Of course, there are minor mistakes that can be fixed easily and do not have a major effect on the real estate investor’s potential for success. On the other hand, there are major mistakes that, if not fixed, can cost an investor his/her real estate investing career. Hang on to find out what the worst mistakes in real estate investments are!
Mistake #1: Not having proper education on real estate investments
Well, to start any kind of business, you need proper education. When we say real estate education, we are not talking about a college degree. We are talking about basics, such as real estate market analysis and real estate metrics that include cash flow, CoC return, and NOI. These are some of the most important aspects of real estate education that every real estate investor must know. Therefore, you can use Mashvisor as an educational tool to learn more about real estate investing.
Mistake #2: Wrong financing
The right financing strategy is vital for your real estate investments. Many real estate investors have gone out of business because of a financing mistake. Before getting into real estate investments, you must scan your financing options. There are plenty of financing programs such as bank loans and private lending. Therefore, make sure you pick a financing strategy with a low interest rate and a low monthly payment. This is especially true for you if you are a beginner real estate investor.
Keep in mind that if you think you do not have the money to start investing in real estate properties, there are plenty of ways to invest in real estate with no money. Mashvisor provides beginner real estate investors with tips on financing an investment business as well as real estate investment strategies that require little money on hand. So, make sure you check out our blogs.
Mistake #3: Wrong location for real estate investments
Now, when it comes to location, you have to do a proper research. An investment property‘s location is no joke at all. A real estate property’s location is the major factor that affects your rental income, occupancy rate, and tax payments. Moreover, why would you want to invest in a rental property that is located in a high crime rate neighborhood, for instance? If you are a beginner real estate investor and have no experience, you can always hire a real estate agent to help you with that.
Mistake #4: Wrong investment strategy
Let’s face it, the wrong real estate investment strategy means wasting your time and resources. Do a research on all the strategies that the real estate investment business has to offer you. There are plenty, and we are sure that you’ll find at least two real estate investment strategies that will suit your needs and long-term investment goals. We on Mashvisor advise beginner real estate investors with buy and holds. It is the safest real estate investment strategy for them as it can serve in the short and the long term. You will be able to make money while holding the property for appreciation.
Mistake #5: Not planning
One of the worst mistakes you can make as a real estate investor is not planning properly. Whatever business you are trying to get into, it requires careful planning. You have to set an action plan in which you set your goals and actions as well as alternative plans. Plan B is a must. Moreover, an exit strategy is essential. So, make sure you have all your movements planned in order to mitigate the risks you face along the way.
Mistake #6: Miscalculating expenses
An investment property that will incur a lot of expenses is no good for you. Your goal is positive cash flow. This is simple math. What you do is subtract the property expenses from your rental income and you are left with your cash flow. The last thing you want is to be left with negative cash flow. Otherwise, how are you benefiting from your real estate investments?
Mistake #7: Wrong partner for real estate investments
This section is for those who are in or considering real estate partnerships. Choosing the right real estate partner is a key element for you to succeed in real estate investments. If you want more information on finding a real estate partner, read our blog “Where and how can you find a business partner for your real estate investing business?“. It will provide you with the best tips on working with partners in real estate investments.
Keep in mind that you should not only know how and where to find a business partner. In addition, make sure you have your partnership written down on paper. Otherwise, you are the one to suffer the consequences.
Mistake #8: Being greedy
You can’t get greedy in real estate investing. There is no way for you to become a millionaire in a month, not even in a year. So, take things slowly, and slowly work on growing your business portfolio. Before taking any steps, think carefully. Analyze your options and do not rush with making money in real estate. Of course, you are going to start to make some money, but it is going to take some time to get to a million.
Mistake #9: Letting your emotions drive you
Your real estate investments business should only be treated as such. It is a business. Make sure that you do not let your emotions get in the way of your decisions. Therefore, remember that the more you act professionally, the more you are going to make money.
Mistake #10: Repeating the same mistakes
Well well, what could be worst than repeating the same mistakes over and over again. Keep in mind that you might get away with a mistake once or maybe twice at the most. But repeating the same mistake over and over can cost you not only money but your whole real estate investment business. So, why not learn from your mistakes? Take notice of the areas where you went wrong at some point. Make sure that you fix what went wrong and draw wise conclusions from your previous mistakes.