I like Mark Twain’s quote,“The cat, having sat upon a hot stove lid, will not sit upon a hot stove lid again. But he won’t sit upon a cold stove lid either.”
Ha! It’s so true!
I like it because the same can be said of investment and real estate. I have made my fair share of mistakes along the way. By sharing a couple of mistakes that I’ve made, I hope to help you to avoid making the same ones.
1. Becoming emotionally tied to property.
This mistake is made frequently in the real estate world. People who rent or flip property can become sentimentally invested in the property. This negatively affects their decision-making ability.
Don’t be afraid to give a “cold shoulder” and avoid major repercussions of attachment – like over-paying for property.
2. Not inspecting your properties regularly.
This one can have serious repercussions should property owners choose to remain absent from the scene.
It’s imperative that you stay up to date on all happenings and the physical state of all your rental properties. Protocols – like written reports from your managers and visitations of property at least every 90 days – are good ways to make sure your investment stays a good investment and doesn’t become a court case on Judge Judy!
3. Running out of cash.
Let me tell you, this is a situation in which you do NOT want to find yourself.
To ensure cash flow, maintain untouchable money, check your credit score every month, and refinance before you need to do so. In addition, don’t be afraid to use the help of others in finding and buying properties. Sometimes it takes a village!
4. Not pre-qualifying your tenants.
The landlord/tenant relationship can good or bad. Make sure yours is not the latter!
When entering any sort of contract or agreement, you should always know who you’re doing business alongside. It might seem like a hassle now, but credit checks and criminal history reports will save you a lot of time, energy, and money in the long run.
5. Failing to obtain a professional opinion.
Getting a professional or second opinion can make all the difference in some cases. Do yourself a favor and get some insight on property values, repairs, and property inspections – to name a few. You’ll be surprised at what you do and do not know.
6. Bypassing low- to moderate-income neighborhoods.
If you only consider high-income neighborhoods and properties, you’re missing out! Low to moderate income homes provide great cash flow, which makes them easy to flip and sell. Appreciation is also good.
Here’s the key with low- moderate-income homes: They must be managed closely and the tenant must have a job. That’s the secret sauce!
These are several of the mistakes novice investors are prone to make. Work hard not to become a statistic!
I believe that some of the best learning tools can be the mistakes we make! What do you think? Is there a mistake that you have gained a valuable lesson from? Share it with us!
Also, consider subscribing to the blog. You’ll receive access to a free library with some real estate resources – like a property condition checklist and my personal PDF rental agreement!