Here are six habits to steer clear from when investing in real estate:
All too often, investors rely on what a property “could” be worth, without ever taking into account it’s current market value. Make sure that you’re making offers based on the facts and what the house is worth right now. If you think too far ahead and overly emphasize future profit margins, you could be setting yourself up for failure.
2. Sticking to the System
Following a system is great and very useful in starting out in real estate investment. But the key is to be able to improvise when problems arise. Gurus that emphasize their “proven, step-by-step system” are not taking into account a huge part of the business: problem solving. Investors need to be ready to change and adapt their strategies according to each individual situation. So, don’t get too caught up in a system and forgo flexibility.
3. Tweaking the Numbers
A major deal-killer is not being realistic with the math. Overestimating ARV (after repair value) or underestimating repairs are a straight shot to a ruined investment. It’s important to always take time to sit down and run the numbers, otherwise you could destroy your deal.
4. Being Lazy with Record Keeping
Keeping adequate records of properties and finances is key. It’s always important to know where you stand and to analyze past investments. Staying up to date with these records allows you to plan successfully for future investments, and will make it easy on your tax and loan officers.
5. Getting Fancy
Sometimes investors get bored with their projects and their systems, and opt for new, exciting deals that don’t fit their plan. Unfortunately, this is an easy way to lose everything you’ve worked towards. It’s a good idea to find a process that works and stick to it; don’t try to rush the process and risk it all.
6. Over Leveraging
This is the last and most common real estate investment mistake on our list. Over leveraging means that you’re carrying more debt than your investment properties can maintain. Keeping up cashflow is the only way to stay above water in your investment career.