Real estate investing provides everyone with an opportunity to make a substantial amount of money. Unfortunately, many investors make costly mistakes. It is imperative for you to take careful measures when it comes to purchasing investment properties. Taking careful measures can help you maximize your profit potential with each deal. Let’s take a close look at seven rookie mistakes you should try to avoid during your real estate investing career.
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Failing to Make Numerous Offers
Experienced real estate investors understand the importance of making numerous offers every week. They know that many of their offers will be turned down. This is the main reason why they make at least one hundred offers every week. You should focus on making at least 100 offers a week. Statistics show that at least three out of one hundred your offers will be accepted.
Purchase Properties at Market Value
Many novice real estate investors find their deals on The Multiple Listing Service. The MLS does offer a wonderful opportunity, but it would be a grave mistake to buy listed properties at their asking price. Purchasing properties at their asking price will not leave you any room for profit.
Here is a simple formula you should always use when it comes to purchasing investment properties:
After Repaired Value x 70% – Estimated Repaired Costs = Maximum Allowable Offer
Investing in Bad Areas
It can be tempting for anyone to buy investment properties in bad areas. You can always find properties in low-income areas being sold at incredibly low prices. You should avoid purchasing properties in crime ridden areas. This will hinder your chances of wholesaling or retailing the property. You might able to put the property up for rent, but you will only earn a small monthly income from your tenant.
Failing to Discover Accurate Comps
You must learn how to find the comps in your investment area. Finding accurate comparable sales will help you determine if any sales activity is taking place in the prospective property’s neighborhood. Finding accurate comparable sales will also help you determine how much you will be able to make after you put the prospective property back on the market. There are many cost-free sites on the internet that can help you find accurate comparable sales in your target area.
Thorough Home Inspection
You should always perform a thorough home inspection on each property that meets your investment criteria. It is important for you to hire a professional home inspector if you do not have any experience in this area. According to Kamloops Septic Service, a professional home inspector will look at the house very carefully and will inspect important items such as the roof and plumbing issues. A thorough home inspection will help you decide whether it is worth moving forward in pursuing the subject property.
Title Company
You need a good title company if you want to succeed in this competitive business. Many investors make the mistake of working with title companies that provide poor service. Poor service from title companies can put you in a position where you can lose deals. You should only work with experienced title companies that have a good reputation in the industry.
Failing to Assemble a Solid Team
Failing to assemble a solid team is one of the primary reasons why many novice real estate investors fail. You need to assemble a team that will work hard on your behalf. Your team should consist of a good real estate agent, an experienced appraiser, and mortgage broker.
No Exit Strategy
You should always have an exit strategy for every potential deal. For example, using contingency clauses in your agreements can help you walk away from deals that are not going well.
You can make a substantial amount of money in real estate investing. It is important that you take heed to the advice listed above. It can help you avoid expensive rookie mistakes.
