Real Estate Investing: Mistakes to Avoid

Real Estate Investing: Mistakes to Avoid

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Real estate investing can be both rewarding and risky. Some people have become very wealthy by investing in real estate, while others have lost the shirts on their backs. There are several underlying factors which determine your chances of investing in real estate successfully. But first, you must understand which mistakes to avoid and how you can improve yourself in those areas.

Below are the top three mistakes to avoid when investing in real estate. 

1) Having No Plan

Amateur real estate investors tend to buy investment properties based on feelings rather than strategy. If they see a property that looks beautiful or is priced inexpensively, then that’ll be enough to persuade them to purchase it.

There is much more to consider about a property besides appearance and price. Just because a property is cheap and looks good, it doesn’t mean that you can immediately flip it for a profit. What about the location of the property? Is there a lot of crime in the neighborhood? What are the other houses selling for in the area? These questions need to be answered.

Create a plan of action. Find the best location to invest in real estate and then figure out the maximum amount of money you’re going to spend. It will involve a lot of research to find the ideal location. Remember, real estate investing is all about location, location, location.

2) Wanting to Get Rich Quick

Real estate investing involves more than buying a property and flipping it for a huge profit. Don’t believe those late-night infomercial gurus that talk about buying tax foreclosed houses for $100 and flipping them for $50,000+. That is unrealistic and almost never happens. Even if you could get a house that cheap, chances are the house would have a lot of costly repairs needed which would surpass its potential market value.

You’re not going to get rich quick as a real estate investor. There is a lot of work involved in real estate investing. It can almost become like a second job because you must research properties, visit properties, secure financing, perform due diligence, close the deal, and repair whatever needs fixing. The whole process might take several months, and in the end, you might gain $10,000 to $50,000 in profit on a standard single-family home.

That might seem like good money, but it is not at the level of Donald Trump. However, as you get better at real estate investing, you’ll take bigger risks and invest in bigger properties. If you do it properly, then you could potentially make bigger returns on your investments.

3) Doing Everything Alone

Real estate investors try to do everything alone because it saves them money. But if you’re going to invest in a property that costs six figures or more, then you certainly don’t want to do everything yourself. Some people you might want to help you include a certified home inspector, real estate attorney, and a skilled handyman.

You don’t need to get a real estate agent involved, especially if you’re dealing with off-market real estate. But those other professionals can help you understand the condition of the house and the liability of each party involved in the deal.


The important thing to remember is to ask questions. Never jump into any real estate deal until you know everything about the property. Make sure you get all the problems and defects of the property laid out in writing. Finally, do your research in order to be confident that your investment will increase in value over the months and years ahead. 

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