Investing in real estate can be extremely rewarding and I highly recommend adding real estate to any investment portfolio. Similar to any investment, it is extremely important to educate yourself in the areas you plan to invest (see A Living or a Fortune). Real estate can be a very rewarding investment due to the potential returns and the tangible nature of the asset. However, investing in real estate has also been the demise of many individuals.
Over the next week I will highlight what I feel are the 5 pitfalls of real estate investing. Because the power of investing in real estate has so drastically changed my life and my future, I want to be able to help others experience the same. By eliminating these potential pitfalls your ability to reap great rewards in real estate will increase.
Falling in Love with a Deal: I see it all the time! A new investor decides to buy an investment property and finds a “great” deal. The investor makes an offer on the property and over night while waiting on the response from the seller they fall in love! Suddenly, they start to think there will never be a deal as good as this one. The result is a lack of negotiation, and usually the investor will overpay for the property.
TRUST ME! Another property will come along and you will be able to find a better deal! I cannot tell you how many times I thought I bought the greatest deal ever, only to trump it weeks later. When buying real estate it is very important to stay focused on the return on investment (ROI, read more about this in Greatest Return). If you feel that you are starting to become attached to a specific property, GET BACK TO THE NUMBERS! If love is blind, then I would say the numbers are your glasses; they will help restore your vision.
When you fall in love with the deal you run the risk of eliminating one of the greatest rewards that investing in real estate has to offer. Like I mentioned in 10 Reasons Why Real Estate is the Best Investment, one of the top aspects of real estate is that you can create value by buying low! If you become attached to a property you often pay more. Buying at a discount is the key!
Tomorrow I will write about Pitfall #2. If you are interested in buying investment real estate be sure to read the next 4 pitfalls to ensure you don’t make these mistakes.
I am happy to help with any questions you may have regarding real estate. Please reply below and I will get right back to you!