Is your real estate investing business growing at a snailâ€™s pace? Maybe itâ€™s because you are making some easily avoidable mistakes.
We all learn from our mistakes and in real estate, the more experience you have the more you learn and the less likely you are to make costly mistakes. Unfortunately, for some people itâ€™s not that easy to survive in this industry because their real estate investing business is not growing as fast as they would like. If you are part of these people, then you could be making these 8 mistakes:
1. You Buy Houses In Bad Neighborhoods
The neighborhood you are investing in matters a lot. Buyers may refuse to buy a house simply because it is in a neighborhood that they are not comfortable living in despite the fact that you invested so much in fixing up the house to look classy. Always look at the bigger picture. There are certain neighborhood magnets that attract buyers such as access to transportation, good schools, reputation, crime rate, etc.
2. You Hire Your Friends
It might seem like a good idea to hire your college buddy to do a paint job but this is almost always a recipe for disaster. You might think that you will get along well and it would feel nice to be able to give your friend a job but 99% of people who subcontract jobs to friends end up ruining that friendship.
3. You Buy Houses With Title Issues
If you are just starting out in the real estate investing business, then you are likely to encounter this problem. The good news is that you can make millions off of buying houses with title issues but only if you know what you are doing.
If you lack the experience or the knowledge, donâ€™t buy a house with a title issue. You could potentially lose lots of money and spend years trying to fix the issue. Talk to a lawyer who knows title laws and only move forward if you are sure itâ€™s the right move. Make sure you have a solid plan in place if you need to walk away when the costs run too high.
4. You Hire Contractors Who Arenâ€™t Credible
How many times have you hired a contractor based on the â€œtrust meâ€ credential? If you have, then you most likely have been burned more than once. Such contractors hardly give out important information such as when they will complete your rehab project or what kind of a plan they have in mind to rehab your project.
Make sure when your contractor promises you anything you put it in writing. The terms of your agreement and any other thing you agree on should be put in writing. Most importantly, ensure that they are insured and licensed.
5. You Always Overpay
Far too many people starting out in the real estate investing business make this common mistake. If you find that you have to adjust almost everything in order to make it work, then it is just not worth it. In most cases, if you do not stick to your numbers, you will end up going way over your budget. Face the fact that the numbers are not working for you and move on.
6. You Buy Houses Based On Emotion
How many times have you ever invested in a house because you feel it has so much potential? We all have and in fact, it is hard not to be carried away with emotion whenever you see something you like.
However, the more detached you are the better off you will be. You should act less on your emotions and think more with your logic. You might miss out on a few deals but there will be others.
7. You Are Not Honest
If you are new at the real estate investing business, it is very tempting to try and stretch the truth. This is not advisable because in the long run you will lose out on great deals, great partners and more listings. If you donâ€™t have any house flip deals under your belt already then it doesnâ€™t hurt to be honest about it. You should partner with a mentor who can help you get through this time and eventually land you your first deal.
8. You Break Trust And Promises
Reputation is everything in real estate business. Word about your untrustworthiness and dishonesty is likely to spread like wildfire in this very tight knit real estate community. You can easily destroy a reputation you spent years building by making one promise that you canâ€™t keep.
Dishonesty is the best way to crush your real estate investing business very fast.
Correct Your Mistakes
Pick one mistake and ask yourself this:
- How does it apply to you?
- What are you doing wrong?
- Whatâ€™s the one thing that you could improve on from what you have read?
- How and when are you going to implement it?
- Take one step at a time; focus on improving one mistake at a time.
You are bound to make a lot of mistakes in real estate investing and the best thing you can do is learn from them. Iâ€™d love to hear what mistakes you made when venturing into this business. Leave a comment below.