When it comes to real estate investment, there are a lot of mistakes that new investors tend to make. While some mistakes are fine and will be fixed with time and experience, others can be absolutely detrimental to a real estate career.
We want to help prevent you from making any of these detrimental mistakes. To do so, we consulted with Chris de Diego and asked him for a list of the biggest mistakes new real estate investors make.
Chris de Diego is an expert residential real estate investor and entrepreneur. He has seen a lot of new investors flop due to easily avoidable mistakes so he had some fantastic insight on this topic.
Chris says you should never buy a piece of property without knowing exactly what you want to do with it. You should know what kind of property you want (single-family, multi-family, vacation, etc), as well as how you plan to finance that property.
Fight the temptation of purchasing every good deal you might see on the market, because you will lose money and time as you scatter to figure out what you want to do with that property. Chris recommends coming up with your plan first and then purchasing real estate that will help you execute that plan.
Real Estate is always local. It doesn’t matter what the market looks like on the other side of the country, or even the next county over.
Make sure you have your ear to the ground on your local marketplace. If you only pay attention to global trends, then you’re going to make a bad purchase based on misleading facts and lose a lot of money.
Chris said that he has seen this exact mistake hundreds of times by bright-eyed investors that never bothered to check their local real estate market before purchasing a lot of property.
Nobody is an expert in everything. A lot of people in a lot of professions make the mistake of trying to become an all-around expert. The phrase is “Jack of all trades, master of none” for a reason.
Chris recommends that you do what you can, and consult experts about what you can’t. Lawyers, handymen, home inspectors, real estate agents, insurance agents, etc. These are the pros you should have on speed dial so that you can gain valuable perspective on every investment you make.
You have to do a lot of calculations before you invest in a property in order to determine what price will make it worth the purchase. These calculations are much easier if you have a good relationship with a group of experts like we mentioned above.
Chris explained that he has seen many young investors come in and purchase a property they thought would be a good deal, only to discover that, after mortgage and maintenance costs, their profit margins fell through the floor.
Leverage can be scary, but if you utilize it correctly it will make you a very successful investor. Chris de Diego has seen a lot of new investors pay for their first few properties out of pocket and by doing so, are missing out on a huge percentage of annual returns.
Do not be afraid of leverage. Learn about it and do your research, so that if you decide not to use it, at least it is an educated decision and not one made out of fear.
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