Given the slow nature of the real estate market, any fledgling investor faces a tough battle against the competition when purchasing and reselling properties. To make sure that you are on the right track, it is best to take a cue from the experience of veteran investors—learn from their mistakes, and you will soon make your business profitable. Here are five blunders you must avoid in real estate investing.
1. Failure to build contacts
Certain market conditions compel investors to enlist help from professionals in completing real estate deals. That being said, you must tap every potential contact that can aid you in buying the right property. Your list of contacts may include experts such as lawyers, insurance agents, real estate agents, accountants, home inspectors, and repairmen.
2. Acquiring bad financing
Many homebuyers make the mistake of getting interest-only or variable loans when the interest rates are high. The ideal time for buying properties is when the interest rates are low. This gives you the flexibility to pay the loans.
3. Failure to factor in all the expenses
Make sure that you take into account all the expenses such as maintenance, renovation, and furnishing the property. Even minor expenses such as taxes and insurance should be anticipated as well.
4. Lack of research
You need to ask plenty of questions about the property and the area where it is situated. What items must be replaced in the house? Are there any problems in the area? Why is the homeowner selling the property? Do I need to buy a home warranty as well? These are just some of the questions you have to ask when choosing the property to purchase.
Looking for the right property is a time-consuming process. That is why many buyers tend to overbid when they find a house that fits their needs, hoping that the seller would accept the bid. As a result, these buyers accumulate more debts and are forced to pay more than they can afford. Avoid this mistake because it can hurt your chances to make money investing in real estate.