A major mistake in real estate investing is to approach the subject with a “get rich” quick attitude. This kind of thinking is guaranteed to lead to a lot of trouble because just like any other form of investment, real estate investing is hard work because a long-term perspective is required and it might be easier to find long-term investments like mutual funds, where professional managers do all the hard work and make the decisions for the investor. In fact, it is unfortunate that a lot of investment advice underplays the hard work and the patience required as well as a proper appreciation of risk tolerance. It is never going to be an easy business and anybody who thinks otherwise is headed for potential disaster.
Planning along the way instead of the beginning in respect of real estate investment is a major cause of unsuccessful investing and seasoned investors say that one of the biggest mistakes that novices make is the lack of proper planning. Very often, you can see them buying a house because they think it is a good deal and then they try and figure out what to do with the investment. This is thinking backwards because common sense dictates that first the investor makes out the plan and only then start to look for the kind of house required for the plan. In other words, the model for investment comes first and only then is it necessary to find property to fit the model. The problem is that many people think of real estate investment as transaction-based instant of strategy based and develop all kinds of emotions such as falling in love with a particular property. The numbers are the numbers in the plan and investors should not overpay. The best way of staying with the plan is to have plenty of activity and work on several properties at the same time. The actual property should make no difference as long as the numbers work in favour of the investor.
Investors in real estate should not make the mistake of trying to do everything by themselves. Professional investors succeed because they build a competent and solid team of professionals, which should include, at minimum, good relationships with at least one good real estate agent, an appraiser, a home inspector, a competent lawyer and a reasonably flexible mortgage lender. This team can help out with prospective deals and put together packages for prospective buyers. Investors in the remodelling and refurbishing part of the business would include in the team other technicians such as numbers, electricians, and painters and so on. The investor should concentrate on managing the investment and leave the rest of the job to the professionals. Moreover, there are no excuses for not doing proper homework. It is appreciated that sometimes deals may require to be closed out quickly, but this should not happen without the proper homework. Without the proper homework, it is difficult to put together a comprehensive case for investment.
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