5 Mistakes That Take Real Estate Investors Off-track

We all make mistakes; it’s human tendency to make mistakes. One good trick to make your mistakes smaller is learning from them. It’s much better if you can learn from the mistakes of others.

The same applies for real estate investors as well; they actually see an uphill battle when they are new to market. When it comes to buying and selling of properties, you can make money, but it isn’t very easy. However, avoiding some mistakes will surely put you on the right track.

Below mentioned are the most common mistakes the real estate investors usually make.

1. Lack of Research

May it be anything, buying a car, television or getting into any new business, it’s really important for you to conduct a thorough research on it, compare with several other models, ask yourself some questions and know if the purchase is worth your money. If it is the real estate investment, the research must be even more rigorous and you will have to think twice before making any decisions. Here are a few points you need to think of.

• Is the property located in a flood zone or a problematic area?

• Is it associated with any foundation or permit issues?

• Why is it being sold or leased?

• How much did the current owner pay for it and when?

You might just be a personal house owner, landlord, land developer or a flipper; you will have to consider a thorough research and make sure that you enquire about the area in which the property is located.

2. Lousy Financing

We all are aware of mortgage options, which allow the buyers to get into the property using the conventional agreement.

Unfortunately, the buyers who have secured variable loans or interest-only loans will have to pay accordingly when the interest rates rise. So, the buyers must make sure that they are financially flexible to make the payments when the interest rate goes up or they need to have a backup plan of converting it into the fixed-rate mortgage down the line.

3. Doing Everything on your Own

The problem with most of the buyers is that, they think they know everything. Even when you know well about the industry, there are chances of you falling down sometimes! You might have completed a fair number of deals in the past, but the process won’t go smoothly all the time, and you won’t be having anyone to fix an unfavourable real estate deal.

The investors must tap every possible resource and the befriend experts who can help them in making a good deal. The list of potential experts should include at least a competent property inspector, savvy real estate agent, good attorney, handyman and an insurance representative.

4. Overpaying

Overpaying is again the result of the first point (lack of research). It always takes time to search a good property and it can be frustrating at times. When you are so prospective about buying a property, the seller understands your need and anxiety of losing the property, and sticks to a rate without reducing it by a bit. Then obviously you will have to pay more than the amount it is worth for.

When you are in the hunt of a property, always know that there are other opportunities out there. If the negotiation process doesn’t go as expected, you can try finding another property that suits your budget. All it takes is a bit of patience.

5. Underestimating Expenses

One more important thing that the buyers must be aware of is the hidden charges. There are lots of maintenance expenses like painting, mowing the lawn, tending the garden and so on. Also there are costs associated with furnishing, keeping the appliances running (refrigerator, washer/dryer, oven, etc.), making structural changes to the building, property taxes and many more.

Make sure that you have the list of all the monthly costs associated with the property before you make a bid, so that you will have a clear idea of the total cost of the property.

Fact is that, if investing on real estate was so easy, everybody would be doing that. There is always a risk associated with it, but if you avoid the mistakes and have a proper planning, no doubt you will be a good real estate investor.
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