3 Rookie Mistakes in Real Estate Investing

Given the lack of success with the real estate market, a number of newbies are flocking to investing in real estate.

It’s evident that without experience and guidance, there are a number of mistakes that are being made. Here are 3 of these mistakes to avoid when investing in real estate:

1: Being Greedy

Flipping properties to other investors can be an excellent way to create a cash reserve. Yet one must be realistic in knowing how much profit is available in such a deal. For example, selling a property to a rehabber and expecting a profit of $10000 is not realistic. Usually rehabbers themselves will want to make that much of a profit themselves. Instead, it’s wise to make a much smaller amount and move on to the next deal. Of course, if you do want to make a bigger profit, then it’s up to you to negotiate a better deal.

2: No Cash Reserves

Almost any real estate investor worth his salt will tell you that cash reserves are the key to success in real estate investing. While buying real estate with nothing is not tough, it’s the repairs, negative cash flow apart from miscellaneous expenses that can be tricky. It’s here that a lack of cash reserves will cause you to make substandard repairs, accept less qualified tenants or even put with up unreasonable demands. A sufficient cash reserve will help you make much better and profitable decisions than you can imagine.

3: Investing Blindly

Real estate is one of those investments where risk is directly proportional to the amount of knowledge you possess. Of course, the learning curve is a bit lengthy and steep yet this apply to the stock market. For this, educating yourself is most important. Once you are able to find good real estate deal, then you’ll find the money for it too. But the catch is that you won’t find the right deals without educating yourself in the first place. In other words, the more you know about financing, acquisition, negotiating, investing techniques and your local marketplace, the less risky your investments are.