3 Mistakes New Investors Make Investing in Real Estate
Feb 23, 2023Real Estate Investing is a popular topic. People are looking for ways to create passive income, diversify their retirement portfolio and take control of their future. With that being said there is a lot of information available on how to invest in real estate. However, there are 3 common mistakes that new investors make.
The first mistake that new investors make is not hiring a coach. There is a lot of free information available. However, it can be overwhelming. So much information that there isn’t a clear path as to what direction you should go. Without a coach you lack clarity and the blueprint to success. Since you’ve not done this before, you want someone that you have access to that you can directly ask questions and receive guidance when needed. If you decide to hire a coach, make sure that you understand exactly what the program offers and if this program will help you to achieve your goals. Read the fine print. Do you vibe with the coach? Is the Coach relatable? Do they respond to your calls / email in a timely manner?
The second mistake that new investors make is paying too much for the property. The old timers say “you make your money when you buy”. When you pay too much for the property it’s harder to make a profit. Be sure to have a strategy for analyzing deals so that you know exactly what the offer price should be. A house is only worth what someone else is willing to pay for it. Remove your emotions so that you aren’t attached to any property. Let the numbers dictate if this is a good deal or not.
Finally, the third most common mistake is under estimating the cost of the renovation. Chances are you have no idea what it cost to renovate a property. With inflation, the cost of just about everything has gone up. Bringing in a professional to provide an estimate is a smart decision. However, finding a good General Contractor is critical. Start now with building strategic relationships so that you have a few options to choose from. You can find General Contractors at places like Lowe’s and Home Depot early in the morning at the ‘pro’ desk.
If you’re considering getting started investing in real estate definitely get a coach! There are a lot of people that didn’t invest in getting the help from a coach up front that ended up paying more on the back end.
Be sure to thoroughly analyze the deal to ensure that you offer the right price and don’t offer too much. However, don’t fall into analysis paralysis where fear stops you from making an offer.
Be sure to get a professional to help you with estimating the renovation costs so that you don’t go too much over budget. Full disclosure is that no one knows what is behind those walls until the renovation starts. Make sure you add a line for ‘miscellaneous’ to your budget for the unexpected.
