October 31, 2012 in Investing In Real Estate
I have a fabulous guest post today from Monte Mohr, a Realtor from Tennessee. As most of you know, I owned and operated a successful home inspection company for many years. During that time I worked with real estate agents on a daily basis; they were an important part of my business. I have l have always said that real estate investors should have one of these hard working professionals on your team, and Monte proves that he is a pro at working with real estate investors. I'm sure you will like this post as much as I did.
As people we are hardwired to learn from our mistakes. But most of us will go to just about any length to avoid making mistakes. Real estate investment mistakes are not fun, but the process of falling down and getting back up is what will lead you to long lasting success. Avoiding the five pitfalls below will help ensure you have healthy investments:
1. Using Multiple Strategies
Investors like to attend seminars to gain knowledge in hopes of increasing their profit. And in this day and age it’s not hard to find an expert trying to sell you their real estate investment program. The danger here is that many times these gurus don’t focus on one single technique. They will have you try every approach and you will quickly find you’ve spread yourself too thin! It’s important to remember that not all strategies will work for your business. Find a niche, practice it until you have mastered it, and then repeat it. Become an expert in one strategy and stay focused on that business model.
2. Spending Too Much Time Analyzing Properties
As any good investor knows, it’s important to conduct thorough research on a property before making an investment. The key is to avoid getting stuck in this step of the process. If you spend too much time thinking about and analyzing the numbers, particularly the estimated future value of a property, you run the risk of losing the deal. Pay attention to current market values so you don’t waste time on unnecessary analysis; don’t purchase something for what might be.
3. Financially Over Extending Yourself
One of the most common mistakes when investing in real estate is over-extending your finances. Quite simply, don’t allow yourself to carry more debt than your investments can sustain. Make sure you maintain a cash flow at all times; don’t tie everything up in financing. If you don’t, you will have an extremely difficult time surviving the market when it goes through a downward cycle. There are plenty of investors who have learned this lesson the hard way and are now bankrupt as a result of the latest crash in the real estate industry.
4. Becoming Emotionally Attached
When we buy a home to live in, we buy with our emotions. “I love this place!” When making a real estate investment you are better served by leaving your emotions out of the decision. The more detached you become from the property, the better decisions you will make. Think with your head and not your heart. It will save you from getting into financial trouble. When you become emotionally attached to a property you will inadvertently find yourself spending time and money on unnecessary renovations and upgrades that won’t help your profit.
5. Forgetting to Self-Assess
Whether a deal is successful or not, it’s important to take some time to reflect on the process once it’s complete. Conducting a self-assessment will help you monitor the strengths and weaknesses in your investment performance so you can improve in future deals. Learn from your mistakes and let them guide you in your future real estate investment business.
Real estate investors feel a strong alliance to one another. Don’t be afraid to ask for help if you are new to the world of investing. If you conduct your real estate investment business with honesty and integrity, and follow these tips you will be on track to achieve success.
Monte Mohr has sold over 2,000 homes in the last 25 years which has given him a unique perspective on Real Estate Investing. To learn more about Monte Mohr and his real estate advice go to http://www.tennesseedreamhomes.com/.