5 Real Estate Investing Mistakes You Can’t Afford To Make

real estate investingWhen you are looking at acquiring real estate, you need to understand your exit strategies. There are truly only 3 components to real estate investing:

  1. How you’re getting into it
  2. Being in it
  3. How you’re getting out

When you really look at it, there are only those three phases (mentioned above) in any real estate project and mistakes can be made throughout each one of those phases. You have to make sure that you’re committed to your real estate investment throughout all phases otherwise it could fail.

 

Real Estate Investing Mistakes You Need To Avoid

1. Buying It Just Because You Love It

Ask yourself if your purchase is a business decision or an emotional one. If you want to buy the property for yourself and you love it, that’s fine. Just be conscious of the reasons you are buying the property before you commit.

A lot of people believe in themselves so much that they forget real estate investing is a business and you have to make these decisions on the way in.

Obviously on the way in, the buy is the most important thing. You can’t reverse those negotiations after you’ve acquired something so it is important that you negotiate based on how you want the project to end up.

Related: Should You Lock In Your Mortgage On Investment Properties?

 

2. Not Staying On Top Of The Propertyreal estate investing

Phase two is the ownership or the hold period. The biggest mistakes I see is not knowing how to manage it and keep on top of the property. It’s like when you buy a new piece of fitness equipment. Initially you are focused and do your daily routines for maybe two or three weeks before you get bored.

Real estate investing is boring when you get down to it. And so one of the biggest mistakes you can make on the second phase is getting bored, not setting up your systems, not staying on top of your properties, looking for the next project before you get the current project sorted out.  Although it is boring, building a system and a routine for each property is key to staying in control and on top of the property.

 

3. Not Having An Exit Strategy

Much like the “in strategy”, there’s got to be a plan for the exit strategy. In business, we always talk about whether it was voluntary or involuntary. It can be the same way when it comes to real estate investing.

A voluntary disposition would be one where you have planned out and determined it to be the correct time to sell.

An involuntary disposition would be:

  • You’ve bought the property wrong – you may have rushed into the purchase and now it is in your personal name or the wrong business, you need to deal with this right away
  • Managed it incorrectly – it gets run down, attracts the wrong tenants or none at all
  • You need to get rid of it (because the bank is may be knocking on your door)

 

4. Not Being Prepared When Things Go Sidewaysreal estate investing

Notice I said “when” and not “if”. That’s because things always end up going sideways at some point. There are no perfect projects that flow without hiccups every single day for the entire span of the project. That doesn’t mean you should be worried, but you need a plan, and a backup plan.

When you’re exiting a project, you need to plan ahead and give as much leeway time as possible. The longer leeway time you have for your disposition, the more chance you have to plan for it.

There can be a few different ways of getting rid of your real estate. You need to make sure it’s performing well because the longer it performs well, the larger the value on the disposition.

Related: Real Estate Investing: Reducing The Risk of Flipping

 

real estate investing5. Not Choosing The Real Estate Agent

I think real estate agents can be worth their weight in gold – if you hire the right one. I regularly talk about building your team and a real estate agent is someone you can absolutely use to help, if they are the right person.

If you’re selling your twenty-unit apartment building, don’t go to your buddy who sells homes and ask him to sell your complex for you. Big mistake!

That individual likely has no idea how to sell a twenty-unit apartment building, he knows how to sell single family homes. Find an expert to help you sell. Yes, it costs money. And yes, you can make more money by using the right person.

Use experts. Build your team. Have the right people in place. The simple mistakes mentioned in this article can be the difference between success and failure in real estate investing.

 

 

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