| Real estate investment is perhaps one of | | | | 4. Making excess payment. One another |
| the most lucrative forms of investment | | | | reason that investors in real estate |
| today. But it is also equally risk bound | | | | goof up in their investment is by paying |
| especially when one is not well versed | | | | too much for the properties they buy. |
| with the trends and nuances of the real | | | | Paying too much and locking up all the |
| estate market. So if you are | | | | funds in the erred property deal will |
| contemplating on investing in real | | | | leave you with no money to redeem |
| estate, it is best to avoid costly | | | | yourself. |
| mistakes in real estate investment | | | | 5. Leaving out the groundwork. Not doing |
| especially when you invest your hard | | | | your homework could be a costly mistake |
| earned money into it. Knowing the most | | | | if you were a real estate investor. |
| common mistakes made by real estate | | | | Every field of business needs sufficient |
| investors helps one steer away from | | | | amount of homework to be done, and real |
| making such mistakes in the future and | | | | estate investment is no exception. Learn |
| ensures good return on investment. | | | | the fundamentals and then venture into |
| Here are the top ten mistakes made by | | | | investing in properties. |
| real estate investors, according to | | | | 6. Throwing caution to the winds. |
| Bankrate has put together the top ten | | | | Investors have to exercise a certain |
| mistakes after speaking to established, | | | | degree of caution and take earnest |
| full-time real estate investors and | | | | efforts while making a deal. New |
| other professionals involved in real | | | | investors often fail in this regard and |
| estate investment such as bankers. Read | | | | sign a deal without doing adequate |
| on to know them and avoid them. | | | | research on the property. |
| 1. Not planning up ahead. Lack of a | | | | 7. Miscalculating money flow. Investors |
| proper plan is the biggest mistake made | | | | whose strategy is to buy, hold and rent |
| by novice investors. Finding a house | | | | out properties need to ensure sufficient |
| after forming a proper investment | | | | cash flow for maintenance. Property |
| strategy is the right way instead of | | | | managers could be expensive and the |
| looking for a house to fit the plan. | | | | owner has to incur more expenses such as |
| Many make the mistake of buying a house | | | | mortgage, taxes, insurance, advertising |
| because it seems to be a good deal and | | | | costs etc. Investors have to allocate |
| then trying to see how they can fit it | | | | their budget such that all these |
| into their plan. Instead of buying a | | | | expenses are taken care of, or end up |
| house and thinking one can plan in due | | | | having their asset turn into a |
| course, investors should rather | | | | liability. |
| concentrate on the numbers and try to | | | | 8. Lowering the volume. A larger volume |
| make offers on multiple properties. This | | | | of deals or transactions helps in |
| will ensure a good property that not | | | | increasing the profits by reducing the |
| only matches their investment model but | | | | impacts of marginal deals. |
| also works out well with the numbers | | | | 9. Getting trapped in your own deal. |
| they had planned for. | | | | Having more number of options at hand |
| 2. To believe you can make money | | | | for the property you buy is a wise |
| quickly. The second major mistake that | | | | strategy. This helps one to be prepared |
| real estate investors make is to think | | | | for fluctuations in the real estate |
| it is very easy to get rich in real | | | | market. Plans to rent out the house |
| estate. This is only a myth and the | | | | could go awry when the rental market |
| reality is that investing in real estate | | | | slumps. Having alternative plans helps |
| is a long term project. | | | | you cut down losses and tackle |
| 3. Doing it single-handedly. For | | | | unexpected situations. |
| becoming a successful real estate | | | | 10. Making incorrect estimates. People |
| investor one needs to build a team of | | | | who plan to rehab their house need to |
| professionals who would assist the | | | | check if they will still reap the |
| investor in his deals. This would | | | | benefits at double the time that they |
| ideally include a real estate agent, an | | | | had estimated. This ensures they do not |
| appraiser, a home inspector, a closing | | | | miscalculate and lose money on the deal. |
| attorney and a lender. | | | | |