The 4 Real Estate Investing Mistakes That Plague Most New Investors
There are so many things that go into navigating the waters of today’s real estate investing world. It can be difficult and complicated to figure this market out, which is why so many new investors often make a number of mistakes. Sometimes these mistakes can be rather minimal, but other times they can be quite costly. Avoidable, expensive mistakes can really add up and really make an impact on your real estate career.
The more you know about these common and avoidable mistakes, the easier it will be to avoid these issues moving forward. Here are the most common mistakes that new investors make.
- Not Calculating Cash Flow- Calculating cash flow ahead of time can be a difficult undertaking. Unfortunately, many investors tend to ignore or underestimate the expenses that they will have when investing in real estate. However, taking the time to calculate expenses in detail and over-estimating most expenses can help get the cash flow right. Don’t forget about things like maintenance, repairs, property management fees and vacancy rates when making these estimates.
- Attempting to Time the Market- This is another mistake that so many new investors make. Everyone thinks that they can predict the market and how they can turn a little investment into a lot of cash—and very few people can actually do this. Even the best economists in the world can’t accurately predict the market. So, even if you’ve lucked out before with the timing of the market, don’t try to repeat this magic. Focus your efforts elsewhere, it will be a better use of your time.
- Not Building a Team- Real estate investing really is a group effort. No matter how independent you may think you are, you need to have reliable network of individuals to help you along your journey. This means a great realtor, home inspector, contractor, handyman and lender. Know who you can rely on and who you like working with so you can continue to count on these individuals with every investment you make in the future.
- Budgeting For the Unexpected- You need to have a cushion when budgeting for real estate investments. It can be easy to forget that you need to have a big cushion set aside and easy to be tempted to put it all towards your property. If you were planning on $15,000 worth of repairs and upgrades to your property, put $20,000 aside. You need to have a cushion. It is always better to budget too much than too little.
Have you made these real estate mistakes before? Hopefully you can learn these lessons the easy way and avoid them before they turn into an expensive mistake for your future.