Are you thinking about jumping into the real estate world? There’s and onslaught of lessons you need to learn before you can become successful investing in this asset class.
The web is filled with online influencers touting that making big money in real estate is incredibly easy, and that success can be had with minimal effort and guidance. This is WRONG.
The truth is, it takes time and effort to be successful in real estate investing. There are too many mistakes you can make if you go in blind. Trust me. I know what I’m talking about.
If you are serious about getting into real estate, having expert guidance and a team of smart people to work with will be essential to your long-term success. Once you’ve discovered these nine common mistakes newbies make and how to avoid them, dive into advanced real estate strategies inside Derek Moneyberg’s Real Estate Riches.
9 Real Estate Investing Mistakes
There are plenty of ways to lose money when you start investing in real estate. Here are the mistakes that new investors frequently make when they start.
1. Not Doing Research
Not doing research is number one for a reason. People think real estate investing is about acquiring properties, but they are wrong.
It’s about getting great properties that make you money consistently.
Good research practices will tell you which properties are worth your investment. They will also steer you away from hot markets the mainstream media is hyping up (because they’re already over priced). Instead, good research practices will focus you on up-and-coming neighborhoods.
Real estate research includes:
- Looking at different locations and how they’ll affect prices in the future
- Seeing if there is an active rental market in the area or not
- Learning federal and local real estate laws
- Getting familiar with the Fair Housing Act
- Seeing if it’s currently a buyer’s or seller’s market
- Asking questions about the property and neighborhood you’re interested in
2. Expecting to Get Rich Right Away
When newbies see a millionaire investor buy a property and then turn around and sell it a couple years later for twice the price, it is easy to think that this is common and that big wins like this will come early in your career.
The truth is, it will take time for your investment to take off. If you’re not prepared to put time and effort into this endeavor, you’re in for a rough go.
You need time to learn the skills to properly invest in real estate, build a portfolio, and network with professionals in the field BEFORE you can make big profits.
3. Not Thinking Long Term
Your investment doesn’t end when you buy a property—that’s just the beginning. You need to prepare for the future. You need to think about maintenance and any potential problems that may arise.
How is the property’s neighborhood or city going to change? Is there an extreme weather problem? Do you need a new roof?
What if the deal falls through? Do you have a backup plan? What if you can’t flip or rent it out right away?
You must be prepared for the vicissitudes of all the factors that impact your investment.
4. Not Making a Plan
Without a map to guide you, you will not get where you want to go. Your plan should include:
- A budget/money rules to follow
- The type of investment you want to make (flipping houses, renting, etc.)
- The direction you want to take with the property
- Potential maintenance costs
- Whether a fixed mortgage or exotic mortgage is better for your investment
5. Not Thinking Like a Landlord
If you plan on renting your properties, you need to consider your potential tenants’ needs like a landlord. In fact, what kind of tenants do you want to attract? Different groups have different needs.
You also need to figure out:
- How to make the property safe and comfortable
- Whether additional amenities are needed
- How much rent to charge
- How the neighborhood will affect the kind of renters that you can attract
- What your plans are if someone doesn’t pay rent
- How you will market your property and find quality tenant
6. Relying on a Verbal Agreement
Not everyone is out to get you, but relying solely on verbal agreements can cost you a ton of money if a relationship falls apart. People constantly change their minds, and verbal agreements can be easily forgotten or altered when they are stored only in you and your counterparty’s minds.
Get those contracts and agreements signed.
7. Buying Before an Inspection
No matter how nice a property looks from the outside, do not buy anything until it has been inspected. Properties can be full of hidden problems that could make the property a nightmare to own.
Inspectors will check the house from top to bottom and report any problems or concerns.
8. Being Too Impulsive or Cautious
You can’t be a good real estate investor if you let your emotions control you. If you’re too impulsive, you make terrible decisions. If you’re too cautious, you won’t make any decisions at all.
You have to find the right balance to know when it’s time to pull the trigger on an investment.
9. Not Getting a Professional to Help You
You can’t be a lone wolf in this game, especially when you’re an amateur. You need to build connections with real estate agents, inspectors, contractors, and more.
If you’re a newbie, you need an expert to show you the ropes. You need an expert because they:
- Have first-hand experience in this world
- Have plenty of connections to share with you
- Will guide you through each stage of the process, step by step
- Will allow you to learn in real-time through shadowing
- Will stop you from making disastrous choices
- Will answer your specific questions on your unique siuation
Take Your First Step In Real Estate Investing
If you got value from this article, take the next step. Real Estate Riches is Derek Moneyberg’s premier real estate investing course, designed to teach you everything you need to know to become a successful real estate investor.
Derek only teaches people who are serious about investing. You must apply and get through an interview process to join this class.
If you’re interested in Real Estate Riches, apply here. There are limited openings and this 10-week course only happens two times per year. Apply before the next cohort starts without you.