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10 Costly Mistakes to Avoid as a New Real Estate Investor For instance, if you know you’re in a seller’s market (little housing supply with lots of demand), making an offer that’s below the asking price probably won’t get you the property— and it might put you in a bidding war situation. Entering into a bidding war can become emotional. If you truly want the property, your logical, rational perceptions can get influenced. Know your limit, and walk away if the price goes higher than your investment objectives. There are always other properties that will come on the market. New investor emotions, stiff competition from other real estate investors— even feelings of losing out on the property you want, challenge new investors to overpay. Maintain a calm mindset, have a buying game plan (and stick to it) and make money when you purchase your investment properties (that’s where the extra profit is found). 16 Mistake # 3 Little or No Research Before Property Purchase 10 Costly Mistakes to Avoid as a New Real Estate Investor
10 Costly Mistakes to Avoid as a New Real Estate Investor It pays to do your homework and to tap local resources to determine which areas are hot now and, more importantly, which ones will be hot in the future. Much of the information is out there and free for the taking. You just have to be willing to do the leg work. Before most people buy a car or a television set they compare different models, ask a lot of questions and try to determine whether what they’re about to purchase is indeed worth the money. The due diligence that goes into investing in a property should be even more rigorous and detailed. Depending on your investment objective, there are also research considerations for each type of real estate investor – whether a personal homeowner, a future landlord, a flipper or a land developer. Not only must the prospective real estate investor ask a lot of questions about the property, but he or she should also inquire about the area (neighborhood) in which it is located. (After all, what good is a nice property if just around the corner is a college frat house known for its all-night keg parties? Unless of course, you’re attracting a student renter.) The following is a short, but not all inclusive list of questions that would-be real estate investors should ask themselves regarding the property in question: -Is the property built in the vicinity of a commercial site, or will long-term construction be occurring in the near future? -Does the property reside in a flood zone or in a problematic area, such as termite problems? -Does the property have foundation or permit “issues” that will need to be addressed? 17 10 Costly Mistakes to Avoid as a New Real Estate Investor
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