Are you new to the world of real estate investing?
As with any new venture, you’ll find that there are lots of areas where you can go astray. But fully understanding the risks and potential mistakes can go a long way toward helping you avoid these errors.
Don’t Plan as You Go
As with every business venture, you must have a plan! You cannot simply “wing it” and expect to find any degree of success.
Of course your plan can evolve and change as you progress, gain experience and alter your goals and objectives, but you must start out with a plan.
A plan will give you direction, which is absolutely essential for success!
Don’t Expect to Get Rich Quick
You wouldn’t start a new e-commerce shop and expect to get rich in a matter of weeks or months. Why would you expect this to occur with investing?
View real estate investing as a business venture; one that requires time to grow, mature and become profitable.
The reality is this: if you expect to be met with instant success or quick riches, you’re going to be sorely disappointed. So be realistic. You may not turn a significant profit in your first year, second year, or even third year. But keep your eye on the prize and continue to build your venture. As long as you’re seeing growth in the long term, you’re on the right path.
Don’t Get Lazy on Due Diligence
Due diligence is absolutely essential to ensuring that you’re getting involved in a profitable investment opportunity. A thorough investigation as part of due diligence will ensure that you don’t encounter any unexpected and costly “surprises” which could take away from your profits.
It’s easy to get complacent when it comes to due diligence and other pre-purchase investigations, especially when they don’t generally reveal anything significant, but all it takes is one bad investment to cause serious issues.
Also, don’t let a seller’s desire to “move quickly” prevent you from doing your homework. Due diligence and real estate research takes time, but it would take the seller even longer to find a new buyer, so don’t feel pressured.
Don’t Forget the Cost of Maintenance
Many new real estate investors underestimate the costs associated with maintaining a property.
There’s everyday maintenance like cutting the grass and, for commercial buildings, cleaning. But you may also encounter incidental expenses such as repairs. And there’s also costs such as insurance and property taxes.
Owning a property can be costly, so beware of these expenses and budget accordingly. Also, don’t underestimate the amount of time that you’ll hold the property; expect (and be prepared) to own the property indefinitely.
Also, read our article on how to choose the right type of investment property for your unique goals and objectives, along with 6 Tips for New Real Estate Investors.
If you’re seeking to get involved in real estate investing, turn to Greg Teele of Teele Enterprises, Inc. Call 224.343.6890.