If you are among what real estate experts call “first-time property investors“, then you ought to know that no matter how much information you think you have; you still need some guidance to make that first investment a successful one.
While your intentions are always big returns but many investors fall victims for the trap of fast returns that they invest in the wrong property.
To create real wealth through real estate investment, there are certain mistakes and patterns you need to avoid for a more profitable investment.
Here are 5 common mistakes first-time property investors do and here is how to avoid them to win big with their real estate investment.
First-time property investors have a tendency to choose their investment as if they are buying their own houses, which is why they tend to over-capitalize their purchase.
While doing so isn’t entirely wrong, but before going and investing all of your money on one property, first you should do a thorough market research.
Before bidding all your money on one investment, you should know the gains and returns this property will provide you.
Also, you should be aware whether this investment will appeal to your buyer requirements and needs or not.
2- Going after short term gains
The most common trap that stands between investors and their first investment is their anxious for short term gains.
Buying and selling properties is not that easy and you could end up losing all your money if you sold your property too soon.
When it comes to real estate investment, a strategic investment is what will reap you rewards.
Look for a highly performing property that generates profit over time rather than searching for a quick fix to sell right away.
Real estate investment requires a lot of patience and persistence, which is why investing with a sum of money you don’t look forward to reaping its rewards right now, is what smart investors do.
Smart investors are the ones who look for the long term gains through the power of compounding.
Meaning that they use the money they gained from one property to invest in another and with the combined gains, they invest in a third one and so on.
3- Inability to walk away
First-time property investors tend to get attached to a property to the extent they become willing to invest all they have instead of walking away from a property deal.
For first time investors, this strategy will maximize your losses.
Running numbers instead, is a good strategy to follow. You don’t have to break your bank to invest in a property especially if it’s your first one.
4- Poor cash flow management
Before diving in real estate investment, you need to understand all there is about the costs involved in acquiring and holding a property.
As mentioned earlier, learn when to walk away when the purchase exceeds your budget because a property will have other expenses.
Holding onto a property is difficult if you haven’t fully thought of how you will manage it’s expenses.
Let’s say you were left without tenants, then your property won’t generate any profits, hence money gone to waste.
5- Thinking you know it all
The biggest mistake you could ever do especially if you are a first-time property investor is thinking you do it all by yourself.
Even the most skillful investors need professional assistance.
The real estate market is not a stable market and a lot of real estate deals don’t just go as smooth as you wish.
Which is why, you should always resort to expert real estate agents who are capable enough to give you heads-up if a specific property has flaws or won’t be a successful investment.
Also, hiring a skilled real estate attorney is a must.
Real estate lawyers are the ones who are going to protect you if the contract has any defects that might come and haunt you later.