These are seven golden nuggets of investment property advice. Take it from an experienced property investor who’s gone before you. Or for those of you who have been around for a while, I’m right there beside you in the trenches.
Pitfall #1: Listening To The Real Estate Agent’s Advice or Recommendation
In most cases, there really shouldn’t be a real estate agent involved unless you’re attempting to purchase bank owned properties.But let’s say there is one.Go ahead and follow this advice. Know than when a real estate agent gets involved in the investment property situation.
The price (without exception) always goes up.
Whenever a real estate agent has provided me with property information, it has been slanted and inaccurate at best.Never trust the information and always verfy everything yourself.
Pitfall #2: Dealing With An Unmotivated Seller
With the current over supply of foreclosures, bank owned homes and REO’s in today’s real estate market, you will more than likely have more close encounters with real estate agents. Most of them are clueless about what we do as real estate investors and cannot really help us.
If you’ve purchased pre-foreclosure properties in the past, you already know you should only be dealing with motivated sellers.Motivated sellers have compelling reasons to sell such as job loss, divorce, drug and/or alcohol addiction or prolonged illness.Your goal should always be to help these people out of these difficult situations and buy these investment properties at really good prices.
Pitfall #3: Not Having Your Exit Strategy In Place
This is fundamental to real estate investing, but for some reason, many of us forget about this one.It’s like sitting down on the toilet and then realizing there’s no toilet paper lying around. We get the order mixed up.Have a solid exit strategy in place BEFORE you put down a dime on your next piece of investment property. It doesn’t matter if you plan on selling the house to a retail buyer or holding the investment rental property and renting it out long term - begin with the end in mind here.
Pitfall #4: Not having Your Funding In Place
Show me the money. That should be your montra for this pitfall.If you have an established banking relationship, take the need time to build upon it and make it even stronger.You need to be able to turn on that financial faucet when you need it. If you don’t have a banking relationship, it’s time to pull out the bow flex and begin dating again.
Pitfall #5: Over Paying For Investment Properties!!
If you’re paying more than $.50/$1.00 (that’s fifty cents on the dollar) for your deals in today’s market, you’re paying too much.investment properties at deeply discounted prices}.If you end up paying too much for the invesment property, you’ll be working for free.Don’t go there - do the math and the math will tell you what to do.
Pitfall #6: Investing In High Risk Neighborhoods
Some houses that seem cheap in the beginning end up becoming very expensive. If you wouldn’t send your wife out in the neighborhood at night then it’s not a good idea to invest. I’ve made this mistake and trust me, it’s a lot of unnecessary work and hassle.And get ready to buy a new pair of running shoes because you will definitely be chasing a lot of rent.
Listening To The Wrong People
If you’re just gettng started in real estate investing, pay close attention where you get your advice from.The most expensive advice is always free.Free advice is very costly. If you’re going to listen to someone, make sure they have a proven track record of investment and business success.
Tags: bank owned properties, investment property, investment rental property, pre-forclosure, property investor
