5 Stupid Mistakes Real Estate Investors Should Avoid
Wednesday Apr 01st, 2020
“When you invest, you are buying a day that you don’t have to work.” - Aya Laraya
One of the biggest mistake real estate investors make is by thinking that they have figured out everything as they have made a few contacts or pretty much lined up their business, contrary to popular perception, it takes a lot more to build a successful real estate business. When it comes to investment, there are many pitfalls, and one wrong move can cost a good deal. The best investor is the one who has knowledge of different areas. Of course, it’s impossible to know everything, but they must have a better understanding of how the business works before investing in real estate. Here are the five potential mistakes that almost every real estate investor makes:
01 – Don’t Just Use Any Contractor
A right contractor is someone that turns numbers into a reality. Hiring a contractor who doesn’t have a license or any experience will only lead to sensitive issues. An experienced and skilled contractor maybe a little expensive, but it’s worth it. What if the wrong ones end up costing you more to fix the problem, what are you really gaining? You should always take an interview before choosing a contractor. Ask them about their past projects, license, and references. There is literally nothing wrong with it! Hiring a contractor is as important as hiring anyone else on your team, so make sure to invest your time.
02 - Know Your Market
Another mistake that most people make is not knowing their target market. Whether international or local, both markets change quickly. The value for a property may not be the same as six months ago. Being an investor, it is crucial to invest time in knowing what is going on in the market. The investors that know their market best are able to have higher profits. Having an online real estate survey may tell you about the value, but it won’t give you accurate numbers. Therefore, it is important to keep an eye and knowing which way your market is drifting. You will surely see profitable results when investing smartly.
03 - Know Your Numbers
Saying that the numbers you use in real estate are the backbone of every deal wouldn’t be wrong. Most investors just plug numbers in to make a deal more attractive. Little do they know, if the numbers shift even slightly, the contract will not make any sense. Repair estimates consume a big part of your budget, so always make sure to know the numbers. You may think that you have a good grasp on numbers, but it’s still better to rely on your realtor, contractor, or someone you can trust. It is no big deal to find numbers, any investor can do that. The challenge is to find the right numbers that can be profitable for your business.
04 - Understand the Contract
You must be thinking about what to consider when investing in real estate, here is more. An investor never wants to get stuck into a deal that is not profitable. To sign the right contract, one must understand it correctly. If the dialectal of your agreement is weak, you may not be able to understand it. Hence, you should have an attorney review it for you. Also, consult a relator on your first few projects. It is better to bear such expenses than signing the wrong contract. If your name is written on the agreement, it means you will be responsible for whatever happens down the road.
05 - Set Goals
As a new investor, you should establish goals that will help you in investing right. These can be short term sales goals or long term market goals. When you set goals, every decision is taken with a plan which reduces loss factors. Not only that, these goals will motivate you in difficult times. Goals make you wake up every day and work to achieve them. Without goals, you can have an unbeaten run, but eventually, you will fall off track and lose focus.
The first few years are critical in any business. Most new investors give up within the first twelve months of their business. If you succeed in avoiding these potential mistakes, you will make it through without facing any considerable problem.
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