Local Records Office in Bellflower, California has been in the real estate business for a few decades now. Seeing the different ways the market has fluctuated over the years, professionals at the Local Records Office have realized that many of these changes have a domino effect due to new or bad investors and real estate agents. Even though real estate investing can be a great way to make money, many mistakes can happen. There are a lot of pitfalls you need to avoid to make sure you’re actually making money, so here are 10 mistakes you should avoid if you’re new to the market.
1. Not knowing how much you can afford
One of the biggest mistakes real estate investors make is trying to buy beyond their means. You need to be aware of your budget and not exceed it, even if a property definitely seems perfect. You’ll just be setting yourself up for a fall. Local Records Office points out that a large portion of investors want to buy repairers, although it’s a great way to think about it, not all repairers can be repaired and make money off of them. Some repairers are money-sucking properties that are in the real estate market for that exact reason. Having a professional contractor take a look at the property for an estimate is a great way to start. After that, you can calculate how much you can afford to spend on the property and how much it will earn.
“Real estate investors only think about flipping a property and making money, but it’s not always that simple. Yes, you can get lucky, but sometimes investors bite off more than they can chew. I’ve seen this many, many times,” says Kevin Dales, a real estate investor in Los Angeles, California.
2. Not educating yourself
Before you commit to buying a property, you need to know everything you can know about it. This not only allows you to better estimate how much money you will need to invest after purchase, but can also allow you to negotiate a lower price. Inquiring about the type of materials and labor the property will need is always the best way to enter, entering without some sort of idea is not a good idea.
3. Get out of your comfort zone
If you’ve managed to invest a modest sum, be sure to stick with what you know until you have the budget to try something new. Even then, you don’t want to invest without the proper knowledge. Stepping out of your comfort zone is a great way to earn big bucks, but don’t let that be an excuse for neglecting to educate yourself.
4. Not charged enough
If you are renting out properties, you need to make sure you are charging enough to make money. This involves researching the area and also the average prices for a property of the type you are renting, to ensure you stay aggressive but profitable. As new real estate investors, we want to make as much money as possible, but we can feel like we can’t compete with the big guys, so the first instinct someone might have is to lower the price.
5. The One Who Got Away
All investors have the one that got away, but sometimes that’s not a bad thing. Just because something looks perfect doesn’t mean you should buy it, especially if the numbers aren’t going up as you go.
“As property investors we will always have the property that got away, it may haunt us for a while, but it happens to the best of us. The best thing to do is to let go and move on. There will be others that you just have to keep looking for,” says Larry Jean, an investor at Front End Investments in Norwalk, California.
6. Be satisfied
If your property requires renovations, you should never be able to pay 100% of the cost until the work is complete. Make sure you’re completely satisfied before handing over all that other money. Be happy with what you find, investors get stuck trying to invest in whatever they can and end up suffering a loss afterwards.
“When there’s so much money to be made in real estate, people never seem satisfied. Investors must learn to invest in the most promising properties and exit. Holding onto too many properties for too long will cause problems,” says Tim Carson, a private real estate investor in Los Angels, California.
7. Relations with tenants
Any relationship with a tenant, friendly or otherwise, is dangerous. Your relationship should be strictly business so that you are never an investment where your emotions conflict with what you need to do to support the business. Especially when it comes to evictions.
8. Not being careful
Most properties don’t have an easily visible problem, which doesn’t mean there isn’t a problem. Be sure to check your buildings diligently so you can catch anything that could become a problem as soon as possible.
9. Not looking for grants or loans
You don’t necessarily need to jump into real estate investment opportunities on your own. Many states offer special loan and grant programs that can cover much of the cost for you. Make sure you are aware of what you can and cannot claim. The Local Records Office strongly suggests that real estate investors use grants and loans for any real estate business.
“Loans and grants are created by the government to assist people with financial assistance when it comes to investing in properties. As long as grants and loans are used for their intended purpose, they were intended to be used most of the time, they will not have to be reimbursed,” says the Local Records Office in Bellflower, California.
10. Ignore cash flow
You should always be fully aware of what is coming into your account from all of your properties. Simply assuming that all is well is the best way to set yourself up for disaster. Find out what’s wrong besides what it should be doing and fix the problem.
Company Name: Local records office
Contact: Roberto Romero
E-mail: Send an email
Call: 1 (800) 790-0721
Address:2202 S. Figueroa Street # 406
City: Los Angeles
State: CA 90007
Country: United States