As a real estate investor, you likely have visions of a life filled with easy income and plenty of free time for travel and leisure. Although real estate investing can certainly bring you wealth and a lifestyle most people only dream of, you need to be aware of common mistakes made by new investors. Being aware of these errors can help you avoid them, and build a profitable investing business that will support the lifestyle you desire.
The single biggest mistake made by new real estate investors is lack of planning. Many new investors fail to develop a long term strategy, instead choosing to plan as they go along. Without a clearly defined set of goals and a detailed plan for achieving them, you will likely make investment decisions that are not optimal for long term profitability. The properties you choose for purchase should fit your investment strategy, not the other way around.
The second mistake make by many investors is failing to properly account for cash flow. While you are the owner of an investment property, you are responsible for not only the mortgage payment, but also the property taxes, insurance, maintenance, association dues, and other expenses that come with owning that home or apartment building. If you find that your rental income is not covering your expenses, you may find it difficult to raise your rent without losing tenants. If you are renovating a home for resale, the property may sit on the market for several months before you locate a qualified buyer. Make sure that you have adequate cash flow to cover expenses during this period.
A third common mistake new real estate investors make is planning for only one exit strategy. If you buy a property with the intention of renovating and selling it, you will need to develop another exit plan if the house doesn’t sell. You could rent the house out until market conditions improve, or offer a buyer a lease-purchase option. Your back up strategies might be less than ideal, but they can keep you from losing money on your investments.
The fourth common mistake is thinking that real estate investing is a ticket to fast wealth. Unless you realize from the beginning that investing takes hard work, patience, and a long term plan, you are likely to become discouraged and give up before you start seeing the kinds of profits that will allow you to live a life of freedom.
Finally, the fifth mistake made by many new investors is deciding you can handle all of the aspects of investing yourself. It’s impossible to be an expert at every facet of real estate investing, so a smart investor will develop a “team” of professionals, such as an attorney, an accountant, property manager, a real estate agent, and several remodeling and maintenance professionals. This will ensure that all aspects of your business are handled correctly, and free up your time so you can continue to develop your real estate empire and long term wealth.
If you are interested in getting started in real estate investing and are interested in Georgia properties, we would appreciate the opportunity to serve you. Find out more about us at http://www.AtlantaHousingSource.com.