Entering the real estate investing world can be an uphill battle for many new investors. Here are 9 pitfalls common to new real estate investors that you should try to avoid.
Are you new to real estate investing? Making a fatal error early on in your career can be expensive. Investing in real estate is profitable but it’s never easy. It’s always a good idea to learn about some of the classic mistakes or pitfalls in real estate, so that you can avoid them before you make any financial blunders.
Pitfall # 1: Thinking You’ll Get Rich Quick
Real estate isn’t some kind of get rich quick scheme. Success in real estate involves deep knowledge. You need to learn experience and master these techniques. You also need patience to wait for the right opportunity and make the right investments in appropriate and favorable deals. If you’ve been watching some of the infomercials, you might have gotten the wrong idea, but in reality, real estate is not a “get rich quick” scheme.
Pitfall # 2: Investing in Wrong Deals
Investing in wrong deals is by far most common mistake by new investors. You should get education, training and learn from mentors to better recognize opportunity. Education may help you succeed where others may fail.
Pitfall #2: Letting Your Emotions Influence Your Decisions
As a new investor, you must recognize that we are not only trying to make profit but we are also trying to satisfy our inner emotional desires. The problem arises when our inner hidden emotional desires influence our decision making abilities. This is one of the most common pitfalls that can lead us to make devastating errors and can hurt us both financially and emotionally.
Pitfall # 3: Making Decisions During Major Life Changes
If you are going through a major life changing episode, it’s wise to avoid making any deals or investment decisions during those times. For example, if you are getting married, getting a divorce, or going through a catastrophe, avoid making any decisions. As an investor, you need to stand on solid a ground before you can make any decisions.
Pitfall # 4: Letting Your Friends Influence Your Decisions
If you allow your friends to control your finances, it can be dangerous. Be sure to choose your acquaintances wisely. Also, make sure to choose the right person to confide and seek advice from.
Pitfall # 5: Focusing Too Much On Negativity
If you’ve had a negative experience with mortgage investing, don’t let it ruin your future. We tend to dwell too much in the past, instead of moving forward. If you’ve had a few setbacks in the past, you should learn from them and move forward.
Pitfall # 6: Not Listening To Property Managers
Failing to seek advice of property managers can be a big mistake. Always pay good attention to your property managers and keep good communication going.
Pitfall # 7: Getting Behind on Debts
Falling behind on payments is one of the most common pitfalls among new investors. It’s recommended that you set aside a healthy margin of reserve or savings to take care of your debts.
Pitfall # 8: Buying and Selling With Panic
Panic is your worst enemy. It’s never wise to rush into any decisions nor is it advisable to react to random setbacks and sell properties.
Pitfall # 9: Neglecting Due Diligence
Investors often have to move fast on their deals. However, never neglect your homework. You cannot become an expert without proper education, years of experience or training.
A new investor most often makes the mistake of closing the deal too quickly without investigating enough about the property. If you invest in a wrong piece of property, you could get stuck making repairs and drowning your savings to fix the house before you could turn around and sell it.
Want to learn more? Checkout The Business of Investing in Second Mortgages from Keyhole Academy. Got a question or comment? Please put down your thoughts in the comment box below. Also, it would be really great if you visit our Facebook page and like it as well.
Source: Keyhole Academy