Real estate investments can be very profitable, just as long as you know what you are doing. Unfortunately, this is an industry in which the probability of making a mistake is very high. Investing in a single property could result in a huge profit OR a huge loss – even if you invest in a profitable location.
If your business or organization is considering real estate investments, be sure to avoid these mistakes:
Going into it with a “get rich quick” attitude – This kind of thinking is fueled by those self-appointed gurus who make you think you’ll become a millionaire overnight just by buying their book and learning secrets about real estate investing. They never mention the hard work, patience, and decision-making process. Sure, you might actually get lucky, but chances are, you’ll make a costly mistake. “Even in the best case scenario,” Fortune Builders explains, “it still takes months to buy and sell”.
Not doing your due diligence – So, you think you’ve found a good deal and all of the indicators are pointing towards it being a good investment. This doesn’t mean that you just sign the contract and write a check without doing your homework to ensure that the property really is likely to appreciate. Also, as you would with any other contact, read a real estate contract very carefully before signing it.
Not having more than one exit strategy – Many people make the mistake of only planning to sell a property or rent it out after investing in it. What if the rental market is down and it doesn’t sell? Always have another exit strategy or two in mind so that you don’t end up getting stuck. For instance, you could consider real estate barter opportunities, or rehabilitate it and offer a lease-purchase to a buyer. If it’s an unappealing piece of property, you’ll probably want to rehabilitate it anyway.
Choosing an unreliable corporate barter organization – If your company does get stuck with property and you decide to barter it, you should make sure that you are working with the right organization. The ideal company is one that makes good on its promise to fulfill its trade credits and deliver results. SherwoodIS.com is a great company to consider due to its years of experience and innovative solutions
Not calculating cash flow correctly – If your plan is to buy and rent out properties, you can’t neglect maintenance and upkeep – even if there are no tenants. The property will still need to be taken care of during the holding period. You must pay mortgage, insurance, taxes, and condo or homeowner association dues. Do you have enough cash flow for all of these ongoing expenses and fees?
Planning as you go along – Having a plan is essential. It’s all too common for new investors to just buy the property because it looks like a good deal at the time and then make plans around it. This is backwards. The Balance explains that “property investment is a business”; therefore, you need to create a business plan and then find a house or commercial property that fits the plan.
Patience, research, planning, and caution are all key attributes in becoming a successful real estate investor. The more effort and hard work you are willing to put in, the greater your ultimate reward will be.