Common Mistakes Investors Make


At the beginning, all investors make mistakes. Investing in real estate is highly appealing to a wide range of people. However, many of these people buy their first investment property without even the slightest clue what they are doing. These beginner investors often make mistakes that could have easily been avoided if they had only done a little more research. Here is a list of some of the most common mistakes that investors make and how they can be avoided:

Planning as You Go

Planning as you go can lead to unexpected problems along the way, many of which can be quite costly. Before you even buy the property, you should have a plan. Many experts suggest never buying a house before you know exactly what you are going to do with it. The first thing you need to do is to figure out what your investment model is and then go buy a property that matches that model.

Underestimating the Cost of Expenses

Before you buy an income property you need to understand that there are more costs involved than just the mortgage. The best thing that you can do to avoid underestimating expenses is to create a list of all monthly maintenance costs associated with running the property and get estimates for each of those. Once you add up the total expenses you will have a better idea of whether or not you will be able to afford the property. Determining expenses beforehand is especially important for flippers because often times you will come across unexpected problems.

Treating Investing as a Hobby Instead of a Business

Real estate investing is an active investment and requires a significant amount of time and effort. Investors who do not devote enough time to their business are not maximizing their profits. Investing is a full-time job that requires discipline. You are your own boss and must be able to set a schedule for yourself and stick to it.

Lack of Research

It seems so simple yet so many inexperienced investors forget to do it. By not doing their homework these investors often find themselves paying way too much for properties that end up leaving them with only a small profit margin. Even experienced investors need to continue to do research. It is important for any real estate investor to do their research to keep up with local market trends and make informed decisions.

Underestimating Renovation Time

Often times inexperienced investors have the misconception that a good quality renovation can be done in 30 or 60 days; however, this isn’t always the case. It’s not uncommon for contractors to run into additional, unforeseen problems throughout the renovation process. There are all sorts of problems that could go unnoticed until you start doing things like tearing down walls and, if bad enough, they could take a significant amount of time to fix.

By avoiding these common mistakes investors can help save themselves from major financial losses. Real estate investing is more than just paying for a house, it’s a full-time job that not everyone can succeed in.

Leave a Reply

Your email address will not be published. Required fields are marked *