The real estate market is getting better every day, which means real estate investing is very appealing, either as a career or a second job. Before you jump in, however, there are a number of common, mistakes beginners make that you should avoid. Established real estate investors and professionals have shared their tips on what not to do when starting to invest in real estate.
1. Buying Without a Plan
A common mistake investors make is buying a home and then trying to figure out what to do with it. This is actually a backwards way to approach real estate investing. Instead, you should have a plan and investment model in place before buying a property. In other words, know what you are going to do with the house before you buy it.
2. Being a One-Man Team
Unless you are a Jack of all trades, you need a team of pros to be a successful real estate investor. It’s critical that you have an agent, appraiser, inspector, attorney, and a lender. Other professionals you may need include a contractor, plumber, landscape architect, designer, handyman, and cleaning service. If you try to do all this yourself, you won’t have time to build your business.
3. Investing in One Property at a Time
If you are buying one home, fixing it up, selling, and then moving on to the next, you’re not running an investment business. Instead, you’re just doing transactions. The only way to make money and build a career as a real estate investor is to have a steady line of deals and prospects.
4. Making Conservative Estimates
Whatever you do, don’t assume a project will take a specific dollar amount in a specific time frame. Always have a liberal estimate and double the amount of money and time you think it will take. This will help you avoid falling into a money pit.
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