Real estate investing can be a profitable mode of investing for any individual provided he avoids committing simple mistakes. It is not difficult as you are not the first one trying to climb Mount Everest. Here is a list of some common mistakes committed by investors that you need to keep in mind when taking a plunge in this field.
Not exploring opportunities outside your market
Vast majority of investors do not try to move out of their comfort zone and continue to pick properties in their own housing market. This is because of the fact they rely on the knowledge they have about their housing market and the convenience they feel with the physical proximity of the properties. You should explore other markets inside your own state and other states in different parts of the country to increase chances of higher profits.
Not knowing when to exit from a property
Real estate investing demands investors to remain detached with their assets and exit form a project at the right time instead of clinging on to it for a long time. If you have purchased a fixer upper, you cannot hold on to it for more than 6 months as you incur maintenance costs. What appears to be a bargain deal can turn into a loss-making venture if you do not know when to exit from a property.
Utilizing costly financing
All real estate projects involve lots of money. As an investor, you can put forward down payment, but the rest of the amount is financed by a lender for the purchase of a property. The choice of lender matters a lot in real estate industry as it decides the kind of profits you can expect from a project. You need to avoid costly financing if you want to earn decent profits from your transactions. You need to do your research about financing options and use the option with lowest interest rates to make sure your investment turns out to be a profitable one. Even a slightly higher interest rate can make you pay a much higher price for a property as you pay installments for a very long time period to your lender.
Not developing a solid network in the industry
If you are an investor, you cannot hope to succeed in real estate investing if you do not develop a strong network of professionals. This team consisting of realtors, brokers, vendors, contractors, and lenders helps in ironing out wrinkles and making your projects smooth and hassle free. In fact, the success of your real estate projects is solely in the hands of your skills and competence in developing strong relationships with important professionals in the world of real estate.
Not keeping a close eye on one’s properties
If you are a landlord, it is very important for you to be closely involved with the affairs of your property as well as your tenants. Just because your tenants are paying their rents on time doesn’t mean you can show indifference to your rental property. You need to be fully aware of returns on your investment, vacancy rates, and condition of your property. Visit the premises of your properties frequently and not just to collect the rent checks from your tenants. Do not wait to get complaint requests from your tenants as some repairs, if they are not seen and fixed on time can cost you thousands of dollars in repairs in future. Always keep records of repairs that you have undertaken from time to time so that you are able to fetch a good price for your property form the buyer in future.
If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.
As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
