Ten Mistakes Real Estate Investors Should Avoid

Real estate investors may be a shrewd lot of people, but in spite of that many don’t realize their mistakes even after faltering. With the current economic slowdown and record numbers of house closure, this is one of the best times for investors to bank substantial profits. Investors initially make unnecessary mistakes that cost them a lot of money. It is better to learn to avoid some of the common mistakes that will put more money in your pocket.

The biggest mistake a lot of newer investors make is to fix things that really don't need to be fixed. For example, many people would like to have a redo of the kitchen, so they go and rip out the cabinets. They may not be aware that new cabinets will cost many dollars. In many of these kinds of cases refinishing the cabinets and fixing hardware on the cabinets is all that is really needed. Instead of spending so much money on custom cabinets, spending little to refinish the existing cabinets should be done. Similarly it is not necessary to have the nicest property in a particular neighborhood. If your property stands above the rest, you will not be able to sell it for top rate because the comparable houses in the area would have sold for much less. This will impact on the selling price of your property. 

If you want to become a successful real estate investor, it better to avoid these ten common mistakes. 

1. Paying too much for a property: You must be aware that you make your profit when you buy a property at an excellent price, not when you sell it. You must focus on buying smart and learn to work only with truly motivated sellers or banks.  

2. Buying a property that has fundamental structural damage: If a house or building has foundation, drainage, and flooding problems, it's best to pass on it.  

3. Not doing calculations properly when estimating fix up costs: This is the most common mistakes new investors usually make. It is always better to assume everything will cost higher than you think, just to be on the safe side.  

4. Not checking for termites: It may sound stupid, but let me assure it isn’t. You should get a termite inspection early as they are hard to spot and can destroy your furniture quickly.

5. Hiring poor contractors: It is better to avoid hiring unlicensed contractors who don’t have insurance to cover their work.  

6. Not getting quotes from multiple subcontractors: It is better to get multiple bids from subcontractors for every repair. It is also beneficial to create a list of repairs and what they cost so you, so that it can used for future reference. 

7. Not advertising the property as soon as completing it: It is better to have a marketing game plan ready, which should be executed immediately upon finishing the work. Remember you only get one chance to make a first impression; make sure your property impresses the buyers. 

8. Not considering multiple exit strategies before purchase: You must and should have exit plans. When things don’t work, what will you do? Always have a plan B exit strategy and execute it immediately when plan A isn't working out too well. 

9. Not obeying your instincts: Upon experience you may get an uneasy feeling about something or someone. It is better to trust your instincts and listen to yourself.  

10. Rehabbing the property to your standards instead of the buyer's standards: You need to repair the property or upgrade it to the point where it is marketable. Rehab according to the market and not your tastes. 

I hope you have been enlightened with the things to avoid. Even the most experienced investor gets it wrong somewhere. The beauty is not in repeating the same mistake twice. Mistakes can be very costly in this field.  

You’ll know you’re doing it right when: 

• You know what to do
• You know when to do it
• You know what not to fear
• You know what to avoid
• You know what to ignore

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