6 Critical Mistakes Made By Rookie Real Estate Investors

Are you thinking of joining the ranks of the many thousands of people who invest in real estate? It’s an appealing proposition, for sure. But the problem is, a first-time real estate investor you can experience something of a bumpy ride. There are numerous pitfalls on the road ahead, and you need to be aware of the most common - and critical - mistakes you might make. Read on to find out more and give yourself the knowledge you will need to succeed.

The quick win

Real estate investment is a long-term game - it’s as simple as that. Yes, some people get lucky and buy at the right time. But it is not easy to make a profit on selling homes and premises in any sector or location. There is a lot of hard work involved, and if you have a job there simply isn’t the time to turn a fast profit. You are far better off seeing real estate as part of your long-term saving plans.

The homework

Your biggest weakness as a first-time investor is your lack of experience. It is critical that you educate yourself in the processes, and seek out help from people who have done it all before. It might cost you money to hire a consultant, of course. But if it saves you tens of thousands, it’s always worth it.

The emotional pull

Successful investors never fall in love with a property. They see everything just as it should be - an investment opportunity. Don’t let your emotions overcome you when bidding for anything. You just end up paying over the odds.

The wrong location

The location is everything when it comes to making a real estate investment work. And understanding the science of location, location, location is vital to your success. It is imperative that you study the suburb you intend to invest in, and it can take months to perform the right levels of due diligence. Sometimes, it can be better to go for the small uptown condos in an up and coming area. They might just bring you a better return than the expensive mansion house in an already expensive location.

Misjudging the expense

Let’s say you are investing in a buy-to-let piece of real estate. You blow your entire budget on the purchase of the property. But you haven’t accounted for the sheer amount of work that you need to perform to get it up to scratch. You might have to end up for renting it out at lower than the market value, which will have a knock-on for your ability to pay your mortgage. Then something breaks down - a boiler, for example. Pretty soon, you will be facing the potential of losing your property and all the money you have invested. It takes money to make money - and you should always have a sufficient amount kept by for repairs and maintenance.

The DIY plans

Many people dream of the idea of buying a property, renovating it themselves, and turning a profit. But unless you have the skills of a builder, plumber, electrician and home inspector, you will be doomed to failure. You have to assemble a team that can carry out work to an appropriate level. Or, you just won’t be able to build a business out of your investment at all.