Five Common Mistakes of a Beginner Real Estate Investor
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Finance > Real Estate
Apr 18, 2007
Five Common Mistakes of a Beginner Real Estate Investor
You've taken that first step and are now ready to start investing in your first property. It may seem a daunting task, but below are some tips on how to avoid common pitfalls and help you get started. 1: Buying books and attending seminars about real estate investing, but never using what you've learnt in practice. It's the most common mistake of investors. There are thousands of would-be geniuses of real estate investing who spend months of their lives and thousands of dollars on investment seminars, books and DVDs, but never try their skills in practice. The point is: when you learn how to make profitable deals, you do it in order to make such deals in the future, right? If you understand the basics of the real estate industry and you are in situation to start your business - do it! You can learn all the 'advanced' tricks on the way. 2: Starting the business without really understanding how the real estate industry really works. There are also a lot of people who do just try too hard to avoid mistake #1. They try to start investing without really knowing what's going on in it, hoping to learn everything on the way. This sooner or later results in getting into a grossly unprofitable deal or even bankruptcy. You must not jump head-on into this industry! And if you have already done it, learn basics of property investing as fast as you can by reading books, asking around fellow investors or attending seminars. It is crucial for you to understand the principles of this trade before you start your operations. 3: Buying the first property that is for sale A lot of investors, even those moderately experienced, tend to "fall in love" with the first or the second property they visit. As the result, they stick to it and do not bother to check if there is any better deal currently on the market. 4: Always looking for a better deal This is the opposite of mistake #3. There are people who are always looking for a better deal, hoping that this opportunity to make a killing is waiting right around the corner. They do not buy anything, but wait, wait and wait. 5: Failing to set proper financial goals Mistakes #3 and #4 are truly head and tails of the same coin: they usually happen when an investor does not write down his or her goals. Thus, he or she cannot determine which deal is good enough and either starts investing blindly into the first property seen or puts all operations on hold. If you often make one of those two mistakes, write down your goals immediately and USE them to determine if the deal is going to be a step forward towards them. Summary Lesson number 1: know what you are doing before you do it. Lesson number 2: know why you are a real estate investor in the first place - only then you will be able to make everything right.
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