4 Mistakes a Real Estate Investor Shouldn't Make
Real estate is considered to be one of the best investment options, especially for beginners, but it isn't without its pitfalls. For example, if you think that buying a house is a profitable investment, you may want to take another look. But as someone once said, we choose the business that we want to be in depending on the kind of problems we are willing to deal with. Therefore, you may have chosen to invest in real estate because you have the resources and knowledge to deal with obstacles involved with it. People also say that you learn from your mistakes, and while it is true, as the guys from Offer Climb Phoenix would gladly relate to you (as beginners, they once lost a deal by trusting a local home investor franchise too much), there are some mistakes that can deal you a fatal blow if you're not careful.
This goes without saying that before you would have already covered the basics, such as doing diligent research, establishing a network of connections, procuring the necessary tools and lining up your financing. More importantly, you should already be familiar with the top 4 strategies of real estate investing, as seen in this infographic. But not only that, you should also know the most common mistakes associated with them.
The Lipstick Flip - is one of the most basic real estate strategies a beginner gets into, so it is easy to get too excited with the prospect. Do not make the mistake of bending or making adjustments to your 70% rule just to make the deal fall through. Always trust and stick to your formula.
Buy & Hold - when buying and holding, you are looking forward to the monthly rent your tenants will be paying, as well as the appreciation of your property. The prospect of this can give you confidence to overpay just to quickly snag a deal. Take time to learn how to buy low, and never base the appreciation of your target property on speculation.
Wholesale - you might think that nothing can go wrong in a task as simple as assigning contracts to buyers to sellers, but one all too common mistake that a wholesaler does is to depend on the sale of single property for too long. When wholesaling, what you want to do is make as many deals fall through as quickly as you can.
BRRR&R - one common mistake when using the Buy, Renovate, Rent, Refinance, and Repeat strategy is not buying at the lowest price possible, but a less obvious trap most investors fall into is when their debt to income ratio is not enough to make the strategy profitable, which is often caused by a bad refinancing deal. Never settle on a deal that does not agree with your profit projections, simply because it is the only one you can find.
If you're planning to buy a property within the top and upcoming states for housing investment this year like Texas where cities like El Paso, Dallas, Austin to name a few, then these 4 tips will definitely come a long way.
Here's the infographic on 4 Real Estate Investing Strategies for New Investors provided by Offer Climb Phoenix.
