Skip to main content

Real Estate Investing Mistakes to Avoid

The process of buying, selling, or investing in real estate can be a lot more complicated than it seems.  Though several opportunities can be encountered while dealing in real estate, the most fortune can come from buying and owning real estate properties to make big gains. We can find some individuals out there aiming to go deep into real estate investing, but they all have a common problem, how to go about their first investment or how to buy their first real estate property for investment purposes.

To help accomplish this, we’ve put together 8 of the most common real estate investing mistakes to help future and established investors get the most from their investment.

  1. Accumulating Bad Credit: In an attempt to keep their ego going, young people mostly find themselves spending money unnecessarily to buy things they don’t need. In return, most of them are known to end up to sustain a lifetime credit card debt they can’t afford. Failure to settle such debts will certainly result in a bad credit score which makes it almost impossible to secure a loan to start up a real estate investment.

 

  1. Not Having Enough Cash: Being financially ready is always very important for an investor. Enough cash is required to run some anticipated big expenses. An investment property might be in need of instant repair or update. In the case of destructive tenants, or just the need for a new roof or HVAC system. Even if it is a new property or a newly renovated one, having enough cash in hand will probably do better. Trust me, this is a lesson not to be learned the hard way.

 

  1. Buying Without Research: The knowledge of a local market. The famous real estate saying “location, location, location” as we all know was created mainly for investors. Rushing into real estate investing without proper knowledge of what’s right will certainly lead to bad results. Proper research is always the key. Drive through neighborhoods, do some research and find out how long properties last on the market before being sold or check out the rental market in some top functioning areas. Just because real estate is a good investment doesn’t guarantee success, failure to properly research may lead to several issues along the line. You may fail to notice an “up-and-coming” neighborhood.

 

  1. Failure to Properly Screen Tenants: Having the intentions of investing in rental properties? This means becoming a landlord. There will be the need for a plan against troublesome tenants. No tenant will approach you and say, ‘I won’t pay rent after a few months, and I’ll punch holes in the walls and throw diapers in the toilet’. This is a problem you’ll face should you fail to properly screen tenants. This can be corrected by properly running checks on credit scores and criminal background on potential tenants.

 

  1. Aiming for the Short-Term and not the Long Term: Most young investors get into the business with the notion that it is a get-rich-quick scheme. Real estate calls for a lot of patience. A rental property may need several months to start generating positive income. If you intend to buy and sell later, you may have to wait several years before your property appreciates enough to bring a return on investment.

 

  1. Being Too Emotionally Attached: I would say emotions are an integral part of every business and people often get affected when they give in more than they can handle. Don’t get emotionally attached to your properties. Put every emotion aside when buying or improving your investment property. Buy or make improvements with your head, not your heart. Always understand the difference between rehabbing and over-improving.