Successful real estate investing is all about making smart choices before you buy that first property. In order to maximize profits while minimizing your risks, you must first be able to identify potential obstacles. Here are five of the biggest mistakes that often plague new investors.
LACK OF A GAME PLAN
First, create a plan, and then, find the property you want to buy. Reversing that order or skipping the plan altogether will lead to unplanned expenditures. Identify your exit strategy before making any other decisions. Are you buying, renovating and flipping or ultimately renting out your investment property? Your exit strategy will often drive decisions around where you buy, the type of asset you are buying, and the capital structure needed to finance your deal. Designing a roadmap will help ensure a successful project.
EXPECTING TO GET RICH QUICK
Profits come one sale at a time. When it comes to real estate investing, patience isn’t just a virtue, it’s a requirement. Just like any other good investment, you have to be in for the long run. Hone your skills on smaller projects in the beginning and work your way up. Hands-on experience is a great educator.
LACK OF EDUCATION
Join local real estate investment groups and attend meetings. These organizations often provide valuable education to new investors. They help you learn more about your local market and will help you learn how to identify opportunities. Many new investors can also meet more experienced investors who may act as a mentor. Learn as much as you can. One bad deal can kill your bottom line.
NOT BUILDING A TEAM
Surround yourself with a team of experts who will help you succeed. Every new real estate investor needs to establish relationships with realtors, wholesalers, lenders, and a credible general contractor or sub-contractors. Consistent inventory flow, capital options, and the ability to offer a quality finished product should add confidence as you get started.
USING THEIR OWN CASH
New real estate investors may perceive debt as something to avoid as they get started. The truth is that utilizing a quality loan program can be a valuable tool when used properly. Leveraging your money allows you to minimize out of pocket expenses and increase your cash on cash returns. Smart investors also like to have additional capital on hand to handle unforeseen expenses, and take advantage of new deals that may present themselves.
Contacting a lender who will guide you through the investment property process is a key factor in a successful real estate investing career.
ABOUT LONGHORN INVESTMENTS
Longhorn III Investments, LLC is a hard money lender based in Dallas, TX. We were formed in 2008 to help provide hard money loans to the single family residential investing market in Texas. Since then we have grown to expand our hard money loan programs to multiple states along with doing hard money loans on multifamily and commercial investment properties as well. As a Texas based hard money lender we will fund both the rehab and purchase price of a property up to 70% of the after repaired value (ARV). Our complementary businesses include a title company in both Dallas and Houston through Excel Title, 2 real estate funds that operate in all aspects of single family investing, and our combined law practice of over 27 years. Click this link to download a free copy of our book, “Hard Money Made Easy or Apply online today.