Despite the lucrative nature of the real estate industry, it can be pretty challenging for new investors if they don’t take out time to learn and be ready to take risks. Succeeding in the industry does not just happen in one day; it happens over time with learning from personal and investors’ mistakes.
As a businessman and a venture capitalist, Ryan Hogan has first-hand experience in real estate investment and has excelled immensely. This is a result of long-term learning and relearning of the industry. For him, real estate is not just about buying and selling properties, but it requires some skills and expertise.
After personally making mistakes as a real estate investor, Ryan Hoggan shares some real estate investment mistakes that should be avoided as a newbie investor.
- Lack of Planning
There is a need to have a plan about what type of real estate investment you need to make, how you intend to utilize your funds, and how you speculate to make the profits and within. It will help if you are always wary of making any investment outside your plan’s scope.
- Lack of Objectivity
This is the primary cause of bankruptcy for most new investors. When you see a property you are interested in; you shouldn’t just jump right in because you feel it is lucrative or because it is cheap. You should be objective about the real facts of the property: how much does it cost? What do you want to use it for?
Either for rentals, leases, or outright sales after remodelling. Is it worth the investment? How long before you start making a profit off it? In other words, as an investor, you must be objective for every property that you purchase or sell.
- Being Emotional
This is one of the most significant mistakes that newbie investors make, especially for those going into the business for the love of just acquiring properties. You should not buy every property that you stumble on just because they appear to be breathtaking and have features that catch your fancy without carryout in-depth fact-finding.
If you do so, you may realize that it’s not worth your investment or that the profit you make off the property is nothing compared to the interest on the loan you got for the property. As a real estate investor, it is advisable never to acquire or sell a property for emotional reasons.
- Boycotting Due Diligence
Most newbie real estate investors have other businesses they are running simultaneously. So, most times, they do not have time to do a proper check of the property and ask all the necessary questions before acquiring the property.
Boycotting due diligence is an expensive mistake. Before you release that check for payment, you should ensure that everything is in place and working properly as specified on paper. You should never be in haste to pay for a property.
Once you learn to be objective, rational and you take time to do due diligence on a property you are set to buy, you will avoid:
- Buying an overpriced property
- Buying controversial properties, especially those with landlord-tenant issues
- Buying an undervalued property with an overpriced cost of remodeling
- Losing your property to ownership controversy in court
- Going bankrupt