3 Pitfalls to Avoid When Playing the Real Estate Investing Game
So you’ve seen your one-thousandth infomercial and the guy in the neatly pressed button-upped white shirt is tantalizing you with his rock-solid no-money-down rags-to-riches real estate investor course for 3 easy payments of a gazillion dollars (but only if you call now). It’s the middle of the night and now you are thinking, “this really looks like a great deal, I better get it fast before the special offer expires.”
(Have you noticed that there’s always a special offer?)
Anyway, we aren’t saying this guy isn’t telling the truth, but regardless of which course or school of thought you buy into there are several key pitfalls that one must avoid when engaging in any real estate investing transaction.
Pitfall Number 1: Paying too much!
The whole point in real estate investing is to find properties that are undervalued. How does one find out what is undervalued versus overvalued? Without getting into technical details, the bottom line is that you need experience. Real estate is essentially one of the highest ticket items in the shopping center of life. Know your limit before you shop, and don’t pay more than you absolutely must.
Pitfall Number 2: Not Knowing the Market
Yes, learning about the market you want to focus on means you are going to have to do some work! This part is common sense, but executing it is where the payoff comes in. How do you make money in real estate? Many investors phrase the answer to that question as “You make your money when you buy.” What it boils down to is this, you study your market and you know it well enough that you know how much money you can expect to sell the house for when the time comes. Knowing that, you structure your purchase so that your profit is already there.
Pitfall Number 3: Buying Houses Instead of Selling Solutions
Real estate investing is not about buying homes from other people. It’s about selling a solution to people who want or need to sell their house. If you keep this in mind, you’ll become more creative about the structuring of your deals. And you’ll close those deals more quickly and with better profit margins because you’ll be working with motivated sellers.
To sum it all up, these are three things that no late night infomercial real estate investing course can teach you. This knowledge is gained through experience. Work on gaining that knowledge and stay out of the money pit.