Are you just getting involved in real estate investing? As with any business opportunity, there’s a learning curve and while real estate investing does tend to be a bit more forgiving than some other money-making opportunities, mistakes can still be quite costly!
So if you’re getting started as a new investor, what common mistakes and pitfalls should you work to avoid? Consider the following tips and recommendations from Kristine Zelazo, a seasoned real estate investor!
Be Careful Whose Advice You Buy
As with any potentially profitable niche, there are lots of gurus and “systems” designed to suck up your cash, but few actually bring results. What’s more, many get so involved in learning about investing that they fail to actually take the plunge, instead spending their time and money on systems, seminars and programs to learn about investing.
It’s best to find one mentor and stick with that individual. Attempting to use lots of different systems just confuses matters and you’re not apt to get good results, plus chances are that you’ll be wasting your money.
As with many things in life, there is no substitute for experience so rather then spending months reading about investing, it’s often better to get involved. Do your homework and your research of course, but don’t go overboard on strategies, systems and “gurus.”
Don’t Invest Money You May Need
The most effective way to lose money on a real estate investment is to sell the property with haste simply because you need to recoup your investment.
Life is full of unexpected twists and turns. Your emergency fund should exist separately from your investment funds. In short, don’t place yourself in a situation where you’re forced to sell before the time is right. This can result in a situation where you make a fraction of what you would have made if you’d kept the property for a longer timeframe; in some cases, it can even cause you to lose money on the deal!
In addition, if you invest money that you may need in the event of an emergency, then you lose a lot of flexibility. For instance, if you under-estimate the costs associated with repairing and renovating a property, then that overage cuts into your profits. But if you can hold the property for a few years, you can recoup some of those losses by maintaining the property as a rental property and holding out until the home’s market value improves. You lose the ability to do this if you actually need the money that you’ve invested.
View Lots of Real Estate…But Be Realistic
Many new investors are over-eager to seal the deal. So don’t jump into the first good deal you encounter. Yes, investments are time-sensitive, but you cannot let this time sensitivity prompt you to invest in the wrong property or jump into a property with haste in a manner that causes you to miss out on a better opportunity.
Conversely, don’t hold out for the perfect property either. Many new investors are tempted to old out for that once-in-a-lifetime deal…but as the term suggests, those opportunities are rare. It’s generally more profitable to perform several moderately good fix and flips versus one really incredible flip.
If you’re ready to get involved as an investor, Kristine Zelazo is here to help! In addition to investing herself, Kristine frequently partners with fellow investors, working to guide industry newcomers to success. To get started, take a few minutes to complete the New Investor Form.
If you’re seeking to sell your home as-is to an investor or in a short sale transaction, turn to Kristine Zelazo, the Short Sale Gal! Complete the home pre-sale form to provide Kristine with additional information on the property in question.
Contact Kristine Zelazo by phone at 800.583.4272.