Top Mistakes Made By Residential Real Estate Investors
When I started investing years ago, as many new investors have experienced, I made costly mistakes. As I speak with other investors, they outline some of the same mistakes that I did. This is not the end-all, be-all list, but can help many beginning investors.
1. They didn't start investing soon enough. It's actually not difficult to buy rental properties or grow your wealth by investing in real estate. With a hot market like the one we have in Texas, every local person should be buying something. Once you learn how to invest, you will wish you started sooner, guaranteed.
2. Too "motivated" or eager to get started, so you overlook the basics. Investing is a process, so you will often just the first deal that comes along, rather than being patient enough to make sure it's the right move. There's a such thing as being too analytical, but it costs less money to be analytical than it does to lose your shirt on a bad deal. 3. Not understanding how to analyze a rental property or account for the costs. I made this mistake and so did another person. You have to verify the management and maintenance fees as well as rents. Sometimes, landlords can have hidden concessions that are not in lease, so you'll lose money on a property that looks great on the surface.
4. Working with contracts without someone on your side. This is a tough one. A general contractor is probably the #1 way to lose money, especially if they know that you are inexperienced. Whether you're a landlord or a rehabber, you'll need to use a service provider or general contractor and some point. Before you hire, talk to an experienced investor.
5. Not calculating enough cost when fixing up a property. This one is always made. At some point, 100% of investors will underestimate their repair costs. The question is.. by how much?
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