17 Terrible Mistakes Made by Real Estate Investors Turned into Useful Tips
A wise man once said, one cannot become Mahatma Ghandi in a span of one day, not even Mahatma Ghandi himself. That proves to say that even in real estate investing, it is inevitable that you will most likely experience some mistakes that would either stumble you or motivate you into doing even better the next time. And that’s the thing about mistakes.
You can turn something negative into positive by learning from it. But if you take a look at this list, well, you might save yourself a lot of mistakes in the future. Here are some useful tips and things every real estate investor should know:
1. Work with the Right People
Whether you are a beginner or a veteran at real estate investment, one thing will never change: no matter how dedicated you are, if you’re not working with the right people, everything will eventually fail. Partnering with reliable people will certainly save you from any untoward unfortunate financial circumstances. To avoid this, you have to know who you are working with not just with the words they say but with the credentials and deeds that they possess. A trusted network of experienced professionals with a legitimate track record of solid performance is beneficial to keep around. You would really want to go for those who actually walk the talk.
2. Choose the right location
Location is the key in real estate investing. It would say a lot as to what kind of property you should be getting. The key here is to do your research properly and choose the best location for your property. You have to be meticulous, if need be. Every single detail – big or small – must be taken into consideration. A sound judgment and a professional opinion would be very helpful in this kind of situation.
3. Choose the right property
No matter how fancy your location is, if the property itself that you chose is the wrong type, then everything will be in shambles. You have to remember to balance everything out, and just like in choosing the right location, you also have to be very observant regarding the property you are eyeing in order to save you from any unwanted regrets in the future. Since you are investing your money in real estate, might as well make sure you invest it well.
4. Good Financing
Good financing rids you one of the mistakes that you would never want to happen again. Failing to finance well is considered as a lethal mistake because some real estate investors have lost their money or went out of business because of failing to handle their finances well. This is where iFundRE.net’s real estate funding comes very handy. IFundRE.net is a real estate funding company that provides Real Estate Loans as quick and easy as possible to borrowers with both perfect and less than perfect credit, even hard money loans! The great thing about private financing is that you can negotiate almost everything. But the bottom line is, no matter what type of financing you use, you have to make sure that you negotiate hard and avoid the worst mistake.
5. Choose the right real estate investment strategy
The moment you know the right property to buy in the perfect location that you searched for, it follows that you already know what you want to do with it. The thing that you have to remember is that you have to make sure that you can afford it. Again, real estate funding becomes your friend in this type of situation. Take note that there are a lot of financing options in real estate – cash and mortgage are the popular ones at that. Make sure that you choose the perfect financing strategy for your particular situation.
6. Calculate your budget correctly
This goes hand in hand with the previous point. Alongside a great real estate investment strategy is the careful planning and calculating of your budget. One of the greatest mistakes real estate investors make is underestimating costs and overestimating income that will take a toll on the probability of generating a negative cash flow. That in itself is not an option in real estate investing.
7. Make an Exit Strategy
There is no definite assurance that everything you have planned would go accordingly to how you want it to be. Same as in investing in real estate, no matter how vivid your idea is of what you want to do with the property that you want to buy, your money will be wasted if things don’t work out as planned. It is crucial to have a safety net to fall on – an exit strategy as an option in case your original plan goes out of hand.
8. Manage Effectively
Once you have already moved forward with the investment, there are a lot of responsibilities that you must adhere to. You might need to drive by the property often and interact with some people and all that. For sure you are not a full time real estate investor. You have a family of your own, some friends, or loved ones who would want to share your time. You need to manage everything effectively and not compromise one thing for the sake of another. Balance is the key.
9. Delegate responsibilities
Unless you are vying to become a superhero or a saint, you need to step down the ladder and seek help if need be. What do moms hire when they can’t handle everything on their own? Exactly, a babysitter. Now, as a real estate investor, especially if you are new to the business, it pays to hire a property manager to manage your properties. If you try to do everything by yourself, the point above will be the result; it will lead to more problems, more costs, and more stress.
10. Drive away fear with confidence
The only thing stronger than fear is hope. And that is something many real estate investors fail to acquire. They can never truly experience all the great things real estate investing can do for them and their finances because of some fears – failure, loss, and risk. These things are holding them back. But the great part about that is you can overcome those fears with knowledge, and with knowledge comes hope, and with hope comes confidence. In order to not be afraid of the dark, you have to learn how create light. Indeed, in real estate investing, you have to learn topics that you are not familiar with – that is how you create light.
11. Starting with a humble beginning
The thought of owning a property might overwhelm you. However, do not let that moment become a path for an impulse decision of pushing through a huge first investment that you might not be able to handle properly. In the long run, it is inevitable that you will go bankrupt right away. Just as a massive tree starts from a tiny seed, so shall be your investments. Begin to plant a seed first – start small and eventually, there will be investment opportunities for you to grow it into amazing lengths.
12. Set aside emotions in decision-making
The key here is to become a professional who makes credible decisions based on research, knowledge, and evidence. Real estate investing is purely business matters. If you think with your heart instead with your head, then you might be luring yourself into trouble. Your investments are your assets. Don’t let your emotions ever cripple the decisions that you make.
13. Learn from previous mistakes
No matter how cliche it may sound, we really do learn from our mistakes. But if you get to fall for the same mistake again, you have to question your own judgment. Surely, there is room from improvement. Do not get swallowed by your loss or your failure, instead draw the right conclusions from it and learn the lessons so you won’t do the same mistakes again in the future.
14. Be patient
When it comes to real estate investor virtues, patience holds one of the highest places. Indeed, a well-rounded investor is patient as he is wise. No matter what kind of investment you have gone with, always know that it takes time and effort before you reap the fruit of your labor.
15. Treating Real Estate as a business
Owning a property is not a joke, nor is it a hobby. Real estate investing is straight up business. Some investors might treat their properties as something that they do for fun, but at the end of the day, they sit down and wonder where all their stress, pain, and financial loss come from. In order to not make it feel like a hobby, you have to create systems that would increase efficiency of your business.
16. Keep records religiously
You can hire a bookkeeper to keep track of your records. This can be a very straining thing to do if you fail to start it at the very beginning. Every documentation and transaction that has happened in your investment must be kept so as to keep everything in order.
17. Start investing now
If you’re looking for a sign when to start investing, well, this is it. This is your sign. People think that investing is best once you have enough money to pay for your property in full. Little do they know that there are trusted real estate funding, such as the iFundRE.net, which gives the best fundings for any real estate venture. Investing in real estate is learned through doing it. What better way to learn than by doing it as early as possible.
Be familiar with these mistakes and you will never tread on the same path as these; although you may walk on your own path of wrongs. But always remember that all mistakes are stepping stones to doing things right the second try. The thing about these real estate investing mistakes is that you have a way out of it! And one helpful way to that is through real estate funding. iFundRE.net is a trusted team who looks to design a loan that meets all of your Commercial & Residential Loan needs. As it is said in the points above, do not be held back by fear, instead take risks and you will reap what you sow.