99% of First-time Investors do this: 4 common real estate mistakes to AVOID
Updated: Jun 30, 2020
Congratulations, now you’ve made the decision to become a Real Estate Investor. So what happens next? I’m sure you’ve already learned a lot of tips and strategies on what you should do to become a successful Real Estate Investor. But learning the things that you SHOULD NOT DO is just as important. In fact, it’s important to know what mistakes you need to avoid to save yourself from a lot of financial problems down the road. That being said, here are 4 Common Mistakes First-Time Real Estate Investors Make (Especially During a Recession), and how you can avoid them.
1. Over Leveraging
By now, you probably understand the beauty of leveraging in real estate. You use the capital that you have and leverage it with bank loans or financing so you can invest in more properties with higher returns. But here’s the problem that most people don’t see with it. While leveraging is a no-brainer decision. They don’t realize that the market isn’t perfect. Most people expect high appreciation or high returns for their investment. They expect to see huge returns in 3-5 years when in reality, you’d have to wait long term, 10- 25 years max before you actually start seeing really huge returns on your investment. Another problem that most people encounter with Over Leveraging is they take on bank loans that are higher than their budget. If you’re getting into a bank loan and you can’t make your payments, you’re risking losing your investment and worse, even tarnishing your record for years to come.
2. Not Doing Your Numbers Right
This is so basic, and yet for a lot of first time real estate investors it should be something that you hammer into your head every single day. I know it can be pretty uncomfortable if you’re showing a low offer and you’re worried about offending the seller. You should let the math and the numbers do the talking for you. Of course different investors have different methods, so I’m not gonna dive deep into that, but here are some questions you need to ask yourself so you’ll be accurate with your numbers.
What is the realistic ARV or After Repair Value of a Property? Look at what most properties are selling for, do your research and compare it to the price of other properties within a half mile range in your area.
What Are The Costs For Repairs? Once you get the numbers for that, make sure to add in a little bit more, because the reality is, most repairs will end up taking longer and cost much more. So expect the unexpected and keep in mind that the older the property, the more repairs it will need.
What are the market conditions in my area? Are the days on most properties in the market long? If so, it means that most people are looking for a larger spread to cover holding costs. Unless there is low inventory and markets are moving quickly.
3. Trying to do everything yourself.
Though every real estate investor attempts this at one time or another, you have little chance at success all by yourself. A great investor will have, at a minimum, a real estate agent, attorney, inspector, handyman, and insurance agent – all on speed dial.
You may not always need them, but they should already be in place, and you shouldn't hesitate to call them if you do want their services. Use your experts to your full advantage.
4. Not Working With A Mentor
Since you’ve probably learned everything you need to know, you think you can jump into the world of Real Estate Investing and get started on your own.
Sure maybe you can be successful on your own, but it’s going to take a lot of testing, trial and error, not to mention the money you’d be wasting in comparison to working with a mentor who’s already “been there and done that.” There’s no better way to fast track your success than investing in a mentor or a coach who is already successful so he can point you in the right direction you need to take and avoid costly mistakes along the way.
Overall most people get more rich after every recession. That’s why most investors look forward to a market crash because it’s the best time to find deals and the best time to invest in real estate today.
If you’re ready to take the next step in your real estate investment journey, I would love to help. I have created a no-nonsense course that can help you go from beginner to profitable real estate investor in the next 90 days. Click HERE to find out more!
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And don’t forget to Register for this Thursday’s Livestream, so you can get your Real Estate questions answered.
So- are you ready to start building wealth through real estate? If the answer is “yes,” then it’s time you followed these steps:
1. Register for my upcoming live stream
2. Download my ebook