Are you looking forward to starting your adventure in real estate investing?
Despite the fact that there is a lot of money to be made in real estate, many investors lose money. In fact, 12% of flips sell at breakeven or loss after expenses.
Like any business, investing requires a set real estate strategy to help you avoid mistakes.
Read on for the top 5 real estate strategy mistakes investors need to avoid!
1. Not Getting Pre-Qualified
While you might think pre-qualification is only necessary for first-time home buyers or inexperienced investors, that is not true.
Visiting with a broker or bank will help you determine how much you can borrow.
Knowing your loan amount will help you plan what types of properties you should be searching for.
You don’t want to lose a great deal and your deposit due to lack of proper financing.
2. Not Knowing The Market
Whether you’re investing in one market or doing a mix of residential, commercial, wholesaling real estate, or other verticals, having a firm understanding of your market is crucial to your success.
Build up a solid local team with experience that can advise you on where and how to invest.
Don’t go into real estate alone. Leverage the experience of your team instead!
3. Not Running The Numbers
Real estate investing is all about positive cash flow.
While it might be tempting to buy that beach house you’ve always wanted if the rent doesn’t cover the mortgage, tax, insurance, utilities, and any other expenses, it’s just not worth it.
Always run the numbers on each property you’re looking at to ensure it will be a good investment with a solid return.
To make your life easier, consider using a spreadsheet template to help you do property analyses.
4. Not Keeping Proper Documentation
Speaking of spreadsheets, failure to keep track expenses, revenue, partnership documents, and contracts is another big mistake that real estate investors make.
Keep these documents separate from personal bank statements and files.
Remember that your investing journey is a business and you should treat it as such!
5. Not Getting an Inspection
When you think you’ve found a winning property and you’re ready to settle, don’t skip the home inspection and invest on good faith alone.
A professional home inspector will do a detailed analysis of the property and give a full report on the condition of the home.
A home inspection can reveal issues like damaged pipes, faulty wiring, foundation issues, and more.
An inspection can save you a lot of money come settlement or neglecting an inspection could cost you a fortune in repairs and maintenance. The choice is yours!
How Does Your Real Estate Strategy Look?
Investing can be an incredibly lucrative venture if you avoid these 5 real estate strategy mistakes! Starting off your investment journey on the right foot is crucial to your success!
Have you come across any mistakes we didn’t mention that affected your real estate venture? Let us know in the comments!
Still need help planning your own real estate strategy? I’m here to help as best I can, so feel free to contact me directly!