Deciding to invest in real estate is a profitable and lucrative decision but you also don’t want to make a lot of mistakes first out of the gate. If you are new to real estate investing let me give you some tips and tricks of the trade to avoid any pitfalls or mistakes.
6 Pitfalls for New Real Estate Investors
#1. Don’t wait for an unrealistic opportunity.
If you wait around too long, you might end up settling for the wrong property. If you are waiting for the perfect investment, it may never, and you may be forced to settle for less than ideal. If you have a specific picture of how an income property will look and feel and where will be located, you might be disappointed.
You may have to give up certain things to benefit from better features. Instead of waiting for the perfect property to fall into your lap, focus on finding the right investment property for you. This could mean getting a home in the right neighborhood, getting a great rate of return or yield, or maximizing your risk and reward balance.
#2. Thinking this is a get rich quick scheme.
This can be an easy one for many new investors to fall into. Sure, you can certainly be successful in investing in income properties with a solid rate of return but expecting it to lead to overnight riches can leave you disappointed. Real estate investing should be viewed as a long-term, buy and hold strategy even though monthly cash flow can be generated the profits can also be found on the property through appreciation as well.
#3. Not considering the costs.
Part of the research that comes with finding a quality investment property is evaluating all the costs involved. It’s not just the purchase and closing costs but it’s the overall investment, fixup costs, repair, and vacancy costs.
#4. Focusing too much on the appearance.
Experienced Real Estate Investors have a knack for this. This is definitely a “don’t judge a book by its cover” type of business. If the house has good bones and just need some cosmetic repairs it can be a lot less expensive then cosmetic things that of been covered up with paint only to hide some of the more major issues like foundation, flooring, and electrical work. Make sure you have a contractor in your back pocket and an inspector that you trust.
#5. Buying a home with a tenant.
This could go two different ways but if you’re buying a property just because there is already a tenant in the home doesn’t necessarily mean it’s a good investment. Cash flow is likely coming in on day one but managing these properties may cost you more than you’re willing to pay.
#6. Thinking you have to do it all yourself.
You might think you’ll be saving money by doing it all, managing it all, and repairing it all yourself but this may actually cost you more in energy, time, and resources. There are benefits to working with real estate investing experts and property managers so it does pay to actually run the numbers and count the cost of having someone else manage and do the repairs for you. Remember, investing is all a numbers game and if the numbers don’t add up then you need to find a better way to do it.
I have helped hundreds of people in Snohomish County find the right real estate investment whether it’s a business or residential property. Call me today to learn more about investing in real estate in Snohomish and King County or start your online search through my website on your own.