5 Real Estate Investing Mistakes

Posted by on Tuesday, June 6th, 2017 at 5:15pm.

Buying your first investment property is exciting! In Chattanooga where home inventory is low, buying investment property or flipping homes is a great opportunity to make additional income. But for any beginner, it’s easy to make mistakes in the process. Here are some of the most easily done missteps and how to avoid them.

1. Assuming it’s a get rich quick situation.

Some people paint real estate investing as easy way to make money fast, and that’s just not always true. There is a lot of time and effort that goes into a real estate investment, and your first one may not go as planned. If you buy a home looking for the market to improve later and give you a profit when you resell, that may take longer than you imagined. Understand that

2. Not doing your homework.

Before you make any kind of investment, whether that’s a new TV or an upgraded vehicle, you’re going to do some research to make the right decision. Buying a home is even more of an investment, so it requires a lot of due diligence before you make a move. Be sure to ask a lot of questions about the home and the neighborhood to make sure it’s the right fit for you.

3. Paying too much.

This seems like a no brainer, but for a first-timer, it’s easy to forget some of the costs that come along the way with a flip project or a home purchase in general. Most likely you won’t purchase a move-in ready home, so it’s important to factor in the cost of necessary repairs. You’ll also need to plan in advance for the cost factor of paying the mortgage while you wait for the home to sell. If you pay too much to give yourself a profit margin after these costs, then you’ll have wasted a lot of effort.

4. Planning as you go

Some people find a house that’s a good deal, and before someone else buys it, they jump on it. Sounds like a good plan, right? Not always. It’s important to plan in advance what you’re doing when it comes to your investing strategy. Otherwise, you have a house that you don’t know what to do with. A better choice is to create your plan first, then find the house that fits into that.

5. Trying to do it alone

Unless you are a serious Renaissance (wo)man, you’re going to need a team by your side in order to make real estate investing work for you. You’ll need a qualified real estate agent, a home inspector, a lender (both for your own deals and to assist with financing for prospective buyers) and an appraiser. And that’s just in the buying process. Don’t forget all of the people you’ll need for the remodeling or maintenance of a property. You can try to do this part yourself, but you won’t be doing a good job making a business if you’re busy with silly minutia.