This week I am writing about the 5 pitfalls of real estate investing. I have written about Pitfall #1, Falling in Love and # 2, Over-estimating the ROI. I hope that you have found these helpful so far. The next pitfall is one I see nearly everyone fall into at some point in the buying process.
Forgetting There are Different Strokes for Different Folks: When I was a real estate agent I would find showing houses to newbie investors amusing to say the least. It would never fail! I would be asked to show the potential buyer properties that would make good investments and create solid cash flow. I would then create a list of properties to view and off we would go. Everything was great until we pulled into the first neighborhood. Their voices changed. Suddenly this exciting experience to view investment properties wasn’t so exciting. Often I would be told that they didn’t even want to view the home. Other times we would view the home and I would catch them making faces out of the corner of my eye. So what happened? The vision the investor had in their head of what the home should look like didn’t match with the neighborhood or home they were seeing.
As an investor you must realize that investing in real estate is much different than buying your personal residence. Although this seems to be common sense, many buyers have a very hard time making the switch in their minds. This results in the investor shopping for a home they would like to live in versus an investment that will give you a great ROI.
Keep in mind that there are different strokes for different folks when analyzing properties. I am continually amazed at the properties that rent the fastest in my portfolio. The properties that I think will never rent usually rent the fastest. Focus less on what you like and dislike and focus more on the items that matter most:
By asking questions like these you take the focus off of the aesthetics of a property and focus on what really matters….THE MONEY.
Remember, you’re not shopping for your dream home. Understanding and avoiding this pitfall will help you get the most profit out of your investment. Don’t miss my next posts for the final two pitfalls!
If you are interested in taking a step toward buying investment property leave a question or comment below and I will get back to you!