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5 COMMON MISTAKES FIRST TIME INVESTORS MAKE

5 COMMON MISTAKES FIRST TIME INVESTORS MAKE

Posted: Sunday January 23, 2022

The decision to become a real estate investor isn’t one to be taken lightly. It takes a lot of hard work and education to be successful. First time investors have a tendency to make the same mistakes, but fortunately, many of them are avoidable. If you’re planning to begin a career in real estate investing, it pays to take the time to educate yourself on the five common mistakes first time investors make and tips for preventing them.

1. STARTING TOO BIG

It’s tempting to jump in with both feet and buy the first big rental property you see, but don’t. Many new investors make the mistake of thinking bigger is better, but buying a rental property with several units is expensive and difficult to manage when you’re just starting out.

Instead, purchase a single-family property or a duplex that you can afford easily. This gives you plenty of opportunity to learn all the ins and outs of being a landlord without all the pressure.

2. UNDERESTIMATING THE COST OF DOING BUSINESS

Your goal is to achieve a positive cash flow as quickly as possible. To do this, you have to know as accurately as possible what it will cost to purchase the property, make repairs, and maintain it every month. Once you have this estimation, set a rent payment that covers those costs plus a little more to put money in your pocket. Do your research and use the right tools to get an accurate estimate.

3. NOT DOING ENOUGH RESEARCH

Many first time real estate investors are over enthusiastic and are wooed by promises of fast profit. While real estate investing is a great way to make money, it requires substantial expertise in order to break even – much less make a profit. There is a wealth of information available on the subject, so there really is no reason a first time investor shouldn’t be prepared.

4. PAYING TOO MUCH

As a real estate investor, you’ll learn a lot of valuable information as you go. However, first time investors tend to pay more for their first investment property, as well as repairs and the like because they just don’t have enough experience. To avoid paying more than you should, talk to other investors for advice and be sure to do a real estate market analysis to be sure you’re getting a good price.

5. PARTNERING WITH THE WRONG PERSON

Partnering with another person or people is a great way to get in on a real estate investment property, especially if you don’t have enough capital of your own or you lack the proper knowledge to do so on your own. However, doing so could set you up for failure if you enter into a contract with the wrong person. As a first time investor, only collaborate with people you already trust or those recommended to you by people you trust.

First time real estate investors make mistakes like any other first time investor. However, by educating yourself on the most common mistakes first time investors make and how to avoid them, you will be on the fast track to making a profit in real estate investing in no time. 


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