Now that you have decided that you are really ready to begin with investment property, there are some killer mistakes that you have to be aware of from day one, in order not to make them along the way. Learning from others’ mistakes will save you much stress, heartache, time and money. Starting out on the right path will help ensure that your investments are sound and your efforts profitable.
1. Not planning ahead
This is the biggest and most often-made mistake in many businesses, but especially in real estate investing. Buying a house because it seemed like a great deal, then trying to figure out how to make an ROI is backwards and most often not profitable. Make sure you have a plan in advance. It does not have to be step-by-step, but it needs to be detailed to ensure the highest ROI possible.
2. Not doing your homework
Learn everything you can about investment property and real estate investing. You would not try to be a professional in any field without some type of education. Don’t slack on it here either. Look into the National Real Estate Investors Association, and if they do not have a local chapter in your area, find a local investor and ask about buying a few hours of their time, or about a mentorship agreement.
3. Believing in get-rich schemes
Real estate investing is not a fast way to get rich. It is hard work and great for long-term investing purposes. You have to make wise decisions, be willing to work hard, and understand the risks. The get-rich gurus do not want you to know these things, they want to get your money for their programs and leave you to sink or swim.
4. Miscalculating cash flow
This goes to your planning and your financials. If you are purchasing a property for rental or leasing prospects, know what your costs are going to be. If the property is move-in ready, it could still sit on the market for several months waiting on a tenant. During vacancy months you have to pay the mortgage, utilities, taxes, insurance, advertising and any dues. Project these costs into your costs, and know the average market time for rental and lease properties to be filled.
5. Not having enough exit strategies
Do not allow yourself to be cornered with a property. You find this amazing deal that you think you just cannot pass up, but you only have one plan-to flip it. What if it doesn’t sell quickly? Maybe then you decide to rent it, but it still sits vacant because the rental market is slow. Do you have more than two exit strategies? Ideally, you should have three to five. If you plan to rehab and flip the property, that is plan A. Plan B could be renting it. Plan C-a lease option or rent-to-own. Plan D should be a when-all-else-fails option, wholesale sales. Selling to other investors can be a smart exit strategy, and if you can at least break even, it will save you the monthly costs of holding the property waiting on an ROI that may not break you even.
Mistakes six through ten will be in the next segment. If you are in the market for buying or selling a home, Ken Couture is the best realtor in Las Vegas to help you. Call us at (702) 476-0060 or fill out the form below.
