Real Estate Investing: 4 Ways to Fail
Real Estate Investing: 4 Ways to Fail. Most investors get started in real estate with a desire to be successful and make money. However, every once in a while investors find new (and sometimes not so new) ways to fail.
Know your market — I can’t stress this enough. If you don’t know your market, you won’t know what the other homes in the area are selling for and what the neighborhood expectations are or how long it’s going to take you to off-load a property. This can be detrimental to a deal. Nobody likes paying on a vacant house that is just sitting there because someone didn’t do his or her research.
Never pay full price — Agents are paid a commission or a percentage of a sale so they like to sell homes for as much as possible. With the market being so hot right now, they are getting away with selling high. However, as an investor you should never pay full price for a property. Always try to negotiate and bring down the price. That helps give you instant equity and sweetens up the deal.
Always have a business plan — Without a plan things can become total chaos. Make sure to keep organized. A good business plan should include both strategical and tactical plans. Make sure you are tracking all possible outcomes so you don’t get caught off guard with no plan. That’s when things can go south fast.
Beware of over-improvement — Don’t be the guy that thinks if he puts the nicest, fanciest, more expensive stuff in a property that he will make bigger returns. That is actually far from the truth. Always make sure your repairs compliment the neighborhood. Make your home one of the nicer homes but don’t overdo it. A great example of this would be if your neighborhood has no garages, don’t spend a ton of money building one, as it doesn’t fit the area. Same thing applies on the inside. If nobody has granite countertops, don’t be the only one who puts them in. You will lose money in those types of situations.