Investing in real estate can be incredibly profitable but it can also be frustrating for real estate investors who rush in to wing it without getting the right real estate education and not knowing where the pitfalls lay.
Watch out for these 4 common killer mistakes real estate investors make…
1. Underestimating Property Management
Becoming a landlord may be way better than any job you have had before and owning rental properties may pay a lot more. However, this doesn’t mean being a landlord is stress free or fun. At some point you are going to want to hire a property manager. Plan ahead and factor this into your cash flow so it doesn’t bankrupt you later.
2. Not Addressing Maintenance Issues Promptly
Dealing with repairs can be a pain and it is often tempting for real estate investors to skimp where they can to maximize cash flow today. Unfortunately, this often comes back to bite you. The problems can quickly expand and become far more costly than if dealt with right away and constant patching versus replacing just means wasting more money in most cases. Don’t let deferred maintenance drag you down.
3. Not Carrying Proper Insurances
No one loves having insurance and we all know that it rarely pays out as much as you want, when you want it to. However, this is not something for real estate investors to skimp on. Even if you don’t take out a mortgage and aren’t required to have it, it could save you big time later. This applies to both title and hazard insurance. Remember, protecting your capital and equity must be your first concern.
4. Not Accounting for All Closing Costs
As with all things in life, closing costs are generally always more than you hoped or expected and your net paycheck is less. A few dollars or even a few thousand dollars may not sting most of the time but being careless with your math can quickly put you in the hole and lumber you with dead weight properties you can’t get rid of.