The Biggest Real Estate Mistakes That Can Cost You

I just read this great article. It outlines some of the basic mistakes that new investors make. As I read the article it occured to me that the ideas presented can be applied to all facet of live. For example the importance of educating yourself on the area of interest, developing a plan before you take action, and then to put your plan into action. All the knowledge in the world is of no value until we breath life into our new found knowledge by action. Action bring life to knowledge.



Enjoy the article.



Here's the link to the article and I have pasted a copy of the article below the link.



The Biggest Real Estate Mistakes That Can Cost You



As you take the road to real estate investing, it is not only important to know the tricks that will take your investment career from rags to riches. You must also know those mistakes that can drag you back to square one. So, this week I have decided to round up the 5 real estate mistakes that can cost you big.

I’ll start with Planning as You Go. This is an unpardonable mistake and often offers no scope for remediation. Many investors first buy the house and then try to fit the plan to it. This works if you are buying a property for personal use and not investments. In case of an investment, you must plan first and then go search for a deal that fits your plan. This way you are in better control of your property holding as you know what to do with it at every stage.

The idea of making money with real estate is quite appealing. And, as a matter of fact, there is a lot of money to be earned trading property. But, like every genuine earning opportunity, it requires an investment of time and effort. You have to be committed to the game if you really want to make a good amount of money. In short, it is not a get rich quick scheme.

The third mistake is the lack of a good network or team. Money is not the only requirement for a successful real estate deal. You must be able to spot good deals, appraise and inspect homes for purchase, repair and remodel a fixer-upper, market your home or make it seller ready. All these tasks cannot be done single-handedly and requires a team of professionals. The smallest network or team should include a real estate coach, a home inspector, an appraiser, a contractor and a closing attorney.

As I already mentioned above, you might have the money to invest, but if you don’t have some background knowledge about real estate, you will experience a few hiccups along the way. I am sure you wouldn’t apply for a job if you didn’t have the basic training for it or didn’t have a clue about it? That’s how it works it for real estate too. The simplest way to educate yourself is to read books, real estate articles or watch videos by real estate professionals. Many real estate experts also organize monthly or bi-monthly seminars where they guide newbie investors on almost all the fundamental aspects of real estate investing.

Finally, the biggest wrecker is a miscalculation of the estimates resulting in a miscalculation of the cash flow. The price of the property is not the only expense against it. One has to pay taxes, maintenance charges, prorating fees, insurance payments and mortgage payments. If you have invested in a fixer upper, you also have to factor in the cost of repairing and refurbishing the property. When the house is put up for sale, the marketing and advertising costs come in too.

The real profit is calculated only after these expenses are deducted from it. If the expenses exceed the income, it results in a negative cash flow. They only way to escape this problem is to do your due diligence which includes researching about the property and the market conditions.

Hope you liked the article and I will see you next week!