Mistakes to Avoid When Starting a Real Estate Investment Business
Congratulations on getting started in the world of real estate investing! Once you land your first real estate deal, you’ll find that your life can change quickly as you improve your negotiating skills. Careful, though, because one mistake can quickly derail an otherwise perfect deal and cause the seller to walk away from the table.
You can make as much as $100,000 in your first year of real estate investing. However, you can also lose $500,000 by making the wrong mistakes. Part of your education is learning what mistakes to avoid when starting a real estate investment business. Let’s look at some of the most common real estate investment mistakes to avoid..
1. Looking for Education from the Wrong Resources
When it comes to real estate investment, there is no shortage of resources. Some of the information you find on your quest for education will serve you well – particularly in those cringe moments when you need to make a big decision. However, there is also a lot of bad information that can ultimately destroy your business.
For instance, you can find information from ‘gurus’ and ‘mentors’ on YouTube, Google searches, or podcasts for free. You may scour the Internet for free education just to save a few dollars. Many of the programs that you may download or access for free are “Idea of the month” programs.
You may gather a new idea that you try to implement, only to find out that it doesn’t work. This causes you to develop an inconsistent approach to investment that is devoid of any real strategy. To succeed in real estate investment, you need a solid, consistent plan that generates real revenue.
2. Paying Too Much for the Real Estate
You may be so desperate to get a deal going that you lower your margins and squeeze the numbers so that the seller would sell the property. However, your impatience can cost you thousands of dollars in profits. If your seller is not motivated to sell the property, then have the discipline to walk away.
There are a variety of ways that you can determine if you are investing too much into a property:
- The house is listed significantly higher than other properties in the neighborhood.
- Similar houses in the neighborhood are selling much faster.
- There has been no offer on the house, although it’s been on the market for a while.
- The house has odd/uncommon renovations or amenities.
- There is a substantial difference between the asking price and the home’s appraisal or market value.
Instead of making the mistake of purchasing the property for the asking price, now is the time to put your real estate negotiation skills to work. An overpriced investment property that is not selling may put the seller into the perfect position lowering the price. You may be able to purchase the property at well below market value so that you can turn a profit instead of paying too much for the property.
3. Using the Wrong Team Members
Even if you land a great deal, you’ll quickly find that the people you work with will either make or break your business. Whether it’s contractors, real estate agents, or business partners, you need to work with talented, honest, hard-working people who can help you elevate your business.
Work with contractors who are licensed, certified, and experienced. Partner with real estate agents who know how to sell a renovated property and work with appraisers and inspectors. Working with the wrong people can drain your assets and cause you to lose thousands of dollars in wasted projects. Also, do your homework to prevent getting ripped off.
4. Adopting a Poor System of Analyzing Deals
The system that you put into place needs to position you to analyze and move on real estate deals quickly. If you are not fast enough or know how to analyze deals within minutes, you will either lose money on a bad deal or miss out on a really good deal.
If it takes you several days to analyze a piece of property, the owner may no longer pick up the phone, be in the area, or be interested in working with you. You’ll lose thousands of dollars just because you didn’t move quickly on a piece of real estate. Your investment strategy should propel you forward quickly, not hold you back.
5. Purchasing and Selling at the Wrong Time
Even if you purchase a property at the right price, you still need to know when to sell the property. For instance, you may purchase a property that needs a lot of work. Delays in construction, appraisals, or inspections can cause you to get desperate and sell the property in the wrong season, at the wrong price, or out of range of a certain price point.
There is a correlation between price points and seasons. You can sell the property at the right price point at a certain time of the year. But you may have to adjust the price point or be patient enough to sell when the season comes back around or when the market is ideal.
You Can Be Successful in Real Estate Investing
Through our real estate training system, you can make your first $100,000 part-time in real estate regardless of your current circumstances. You simply need the ability to follow our proven system and use the resources and tools available. How can you get started?
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