Real estate investing can be a very fun financial venture, not to mention a profitable one. As difficult as getting a mortgage often seems to be, it’s much easier than most people assume.
The benefits of this undertaking also far outweigh the potential problems, making it a fairly low-risk opportunity too.
That being said, investing in property can be tricky, especially when you have no experience. With that in mind, here are six costly mistakes that you should try to avoid.
#1 Skipping Doing Your Homework
You wouldn’t try to perform surgery or fly a plane without years of training to fall back on. Although investing doesn’t necessarily risk lives, it can kill your finances if you’re not careful.
This is why it’s so important that you learn the basics before diving into the business. You can start by borrowing books from the library and reading articles online.
You might want to take a course too.
#2 Working On Your Own
Although it can often seem like it in the media, no entrepreneur makes it big on their own.
Even huge successes, like Richard Branson, Roger O’Steen, and Mark Zuckerberg will have had help along the way, which means that you should too.
You can’t do everything by yourself, so you’ll need an entire team of real estate agents, home inspectors, contractors, and more to help you.
#3 Asking Friends For Loans
Finding a great investment opportunity is difficult when you don’t have the funds to invest. However, that doesn’t mean that you should borrow from friends or relatives.
Many novice investors make this mistake, and it very rarely ends well. If you can’t afford to fund your venture yourself, then look into other options, like bank loans, crowdfunding, and angel investors.
#4 Paying Way Too Much
There is only so much money that you can spend on a property before you start making a loss. Because of this, you have to go into negotiations with a clear budget in mind.
Remember to consider the costs involved in repairing and renovating the property and prepare to walk away if the price isn’t right. This definitely isn’t easy, but it’s necessary if you are to make a profit.
#5 Having No Backup Plan
The world of real estate is often difficult to venture. This is why it’s so important that you have more than one exit strategy when you purchase a property.
You should know whether you want to sell or rent out the building, but, if this doesn’t work, then you need at least one other idea. If you’re struggling to sell the property, for example, then you might be able to rent it out for a while.
#6 Giving Up Too Soon
Just like any sort of business, real estate definitely comes with its challenges. The problem is that many newbie investors assume that it will be so much easier than it actually is.
You’re never going to get anywhere good if you quit before you’re ahead, so stick at it for a while. Things won’t always work out, but you never know until you try.
All real estate investors make mistakes, but with the advice above, you can avoid some of the most common ones.
Have you ever made any of these mistakes as a real estate investor?