As a real estate investor, you wouldn’t want to commit mistakes daily. We want to ensure that we avoid previous real estate investors’ errors that have gone before us. Being new in the industry of real estate investing, there will be slips to encounter and overcome. Utilizing and maximizing the knowledge on what to avoid “classic mistakes,” as some may call it, will assure us that we are leaving room for minimal errors or new ones to overcome.
Let’s go through these classic or common mistakes to avoid them. Avoidance may be better than cure; once we are in such a situation, we barely know how to handle this, leading to further down spiraling in the industry. Use these tips to your advantage to become the real estate investor you have dreamed of being.
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Rushing Research
Nothing good can come from rushing a sale or rushing the process that would require time and effort. Real estate investors look for shortcuts, and or they try to find the easy route in getting the job done faster than expected. You aren’t going to succeed in this manner. Remember that people who take the easy way out or maximize on shortcuts will also gain short-term success.
A quick tip to avoid such mistakes is to take your time in researching properties you plan to purchase. Given the specific situation that we are in, visiting and ocular viewing can be done virtually. Why not maximize this by going through various properties that will offer the best and most profitable return. There are some questions that we can share as you consider purchasing a particular property. This will minimize the mistake of rushing to make the deal.
- Is the property within construction or commercial site that may cause a nuisance to the new owner.
- Is the property being sold within a flood zone or near a flood zone?
- Is there an issue with the property’s foundation in line with long term residency or paperwork issues?
- What are the benefits in terms of inclusions and items to have renovated?
- Why is the property up for sale?
- What was the initial price for the property being sold?
You may have questions that are not in the list to further research on properties you plan to purchase, do not limit yourself to what is already mentioned. Try to expand your search and learn as much as you can in line with your investment.
Limiting Your Knowledge To Yourself
An issue that real estate investors encounter is that they assume and claim that they know it all. They think that they do not need the resources provided by the world wide web and courses available at your fingertips. Technological advancement is at its prime, and we should be taking advantage of this. Learning will only be limited to the learner that has limited themselves to a certain extent.
So if you continue to claim that you are in charge of what is happening in the real estate industry, that you are the only one capable of making a sale, that your judgment supersedes the judgment of others, then you are leading yourself down an abyss that you won’t get out off any time soon.
Real estate investors should know how to maximize and utilize resources within their reach to further improve in the field. If you settle for less than what you deserve and capable of, you will not make it far in this industry.
Overlooking Needs
Some real estate investors only focus on what the buyer wants. Selling properties will surely be easy if you would provide your clients and buyers what they want. They will slowly realize that their needs are not met; therefore, they would either flip during the contract signing or follow through.
Imagine providing a client with everything they want in terms of luxury; then they aren’t aware of the restrictions within their budget. Imagine going through numerous visits, drafting contracts, and closing the sale only to find out that they can’t afford it.
Finding the balance between both wants and needs is crucial in purchasing properties. Do not only give them what can make them happy, help them find a property that will keep them safe and healthy, both physically and emotionally. The sale made will surely be just as rewarding.
Overpaying
This would be related to the first mistake discussed earlier. If you aren’t doing the research properly, there are chances that you are overpaying. Overpaying is a coined term in the real estate industry that connotes paying more than property values. It may be related to knowing the ins and out before purchasing. How much would the initial investment be? Would it cost more over time (asset value)? What was the original price before selling? All these computations and research, and more were overlooked and has taken a toll on your funds.
Underestimating
It is also related to the first and second to the last point. Underestimating would be the mistake wherein a relatively new real estate investor in the field has chosen to undercompensate for the property that they have sold. Without prior knowledge of the asset value, they may have sold the property for lower than its retail value. In return, it would not provide a hefty profit. Moreover, it would result in a considerable loss.
Keep in mind that investments in the real estate industry are not cheap, and making such a mistake will result in your loss in the field. Imagine if this was your first sale, and instead of making money, you lost more. How would you embark on another investment to at least break-even or gain more? It’s going to be far more challenging than you would have expected and would lead to you giving up.
These mistakes can happen to any real estate investor. It may even occur to seasoned and tenured investors in the industry. We are all prone to such errors, yet it doesn’t define or dictate our faith in the industry. There will always be scenarios that can make us feel rotten to the core or that there is no turning back. Remember your “why” as you started in the journey of real estate investing and follow through as you progress in the field.
There will always be that ray of sunshine after the rain.
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Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.
Sources: https://www.zillow.com/blog/the-6-worst-types-of-real-estate-investments-118759/
