As a new real estate investor, probably the first thing that they must be aware of is the pitfalls that await them if they’re not careful. Let’s be honest: real estate investing, for experienced or new investors, can catch you off guard even if you’re well-prepared.
So, here are 5 mistakes that new real estate investors should avoid:
#1: No Business Plan
If you haven’t put some thought into a business plan, you’re doomed to fail. Take some time to think about the details of a business and have a mentor, if necessary, help you with it.
#2: Wrong Legal Entity
Sometimes investing practices pick the wrong legal identity and end with several tax issues to contend with. As a rule, not only should you seek the recommendation of an attorney about this but also a tax professional.
#3: Unaware of the Market Numbers
Knowing your market is vital to being successful in real estate investing. Keeping statistics such as the supply curve and average days on market on a neighborhood by neighborhood basis can go a long way in getting this information. A real estate broker can help with you with this.
#4: Mistaking the value of a property
Instead of using software such as Zillow, Trulia or e-appraisal to ascertain the value of a property, learn how to do a ‘comparative sales’ analysis. It’s not such a bad idea to get your own data too.
#5: Writing Bad Contracts
Writing up a bad contract is a distinct possibility as most real estate courses use contracts that are not written by attorneys. Instead, make the time to learn your local Realty form and draw up a few addendums as well. Obviously, an attorney can help you perfect this!