When done correctly, buying and selling properties can be well worth the effort. The highest priority of real estate investing is to make solid investment decisions and avoid common mistakes and industry pitfalls. Sometimes that’s surprisingly easier said than done. Here are the top four mistakes that people make, which can cause them to lose money or limit their return on investment.
1. Poor Research
It almost goes without saying, yet this mistake is commonly made by inexperienced property buyers. Before any deal is done, research is one of the highest value activities you can do to ensure investment success. You need to learn what to look for in a property, and what the questions to ask about it.
The information you obtain should involve not only the house in its current condition, but also the surrounding neighborhood. Find out about any issues with the house, it’s location and access, city zoning and development plans in the area, etc.
2. Bad Financing
Even after the 2008 market crisis and real estate crash, mortgage loans continue to have a fair amount of creative financing solutions. These include certain adjustable-rate mortgages and interest-only loans. The truth is, a lot of these loan types offer lousy mortgage terms and poor long-term performance. These inventive loans are targeted at specific buyers in the marketplace who otherwise may not be able to obtain a mortgage loan at all.
3. DIY Everything
After doing a handful of deals, some buyers begin to believe they have this real estate investing thing all figured out. They are certainly more experienced than many, but that doesn’t mean they are qualified to handle the details of a deal all on their own. But some try. They begin to forgo hiring and paying their team of experts to help them vet potential properties.
Real estate investing requires that you work with experienced professionals, including a real estate agent, home inspector, attorney, insurance agent, and remodeling/construction pro. These experts will alert you to possible red flags or flaws in the property or the deal itself. Don’t dupe yourself into thinking you can do it all yourself.
4. Paying Too Much
This particular problem sometimes shows up after a lot of due diligence has been completed. Having found a property that meets all the checkboxes, it’s only natural that they would want to close the deal and reap the benefit of their efforts. But in the process, an overly eager buyer can easily create new problems, such as taking on too much debt. It’s vital to stay the course and not get too emotionally committed to buying a property. Regret may be your only reward.
Local Real Estate Investing Pros
Thinking about real estate investing but not sure where to start? Why not begin with a simple conversation? At DUFFY Realty, our agents know the Atlanta real estate market like the backs of their hands. Call today: (678) 318-1700. It doesn’t cost you anything to explore your options with us.