3 Ways Not to Get Burned Investing in Real Estate

The biggest reason people do not invest in real estate is fear.  I ask this question when I am teaching seminars and eighty percent of the students are afraid.  The other twenty percent basically come down to a lack of knowledge, which means they are afraid they don’t know everything they need to.

If you are like the eighty percent of the people then fear is holding you back.  The down side to this fear is it is paralyzing you from investing in real estate in what is becoming one of the best markets we have seen in the last 20 years.  It is time to turn  your fear to something much worse that you need to be afraid of and that is missing out on making some serious money in real estate.

Let’s make a deal.  I am going to share with you the three biggest mistakes investors make in real estate that get them burned and how to avoid them.  In return you need to learn each of these strategies and then promise me you are going to take control of your financial future and get out there and start investing in real estate, whether it is single family homes, apartments or any other type of real estate.

Burned Mistake Number One

The value of the home.  I have to tell you the value of a home is somewhat subjective.  As the economics adage goes the value is whatever someone is willing to pay for it. So how do we figure that out? The best way is to look at what other homes in the area that are very similar to your target property have sold for recently and go off of that. There is a little bit of art to this but if you gather all of the sold home information you are going to get a pretty good idea.  The key is to make sure these other homes, comparable sales, are actually comparable to your home. If you want more details on this click here to watch the video, “How to Calculate Your ARV.“

Burned Mistake Number Two

Guessing on repairs.  I don’t really get this but it happens time and again.  Now this is not the same as repair over runs.  That happens to everyone at some point but if we plan for them it won’t kill us.  Instead I am talking about a newer investor without any specific contractor knowledge who goes into a home that is need of repair and “guesses” on the cost of the repairs.  The bad part about uneducated guesses is they are rarely correct, whether too high or too low, rarely correct.

The solution is so easy.  Find a good contractor and ask them for a bid on the repair work, even better find three of them and ask for bids!  This will get you a lot closer.  If you aren’t sure how to find a good contractor then now is the time to get started on the solution to burned mistake number three.

Burned Mistake Number Three

Going it alone.  So many new investors either because of fear or personality type decide they are going to do everything on their own.  This is the scariest thought in the world to me.  Do you think Donald Trump does everything in his business when it comes to deciding to invest in a new project? Of course not.  If you want to find the best contractor or the best anything else then you need to be networked with other quality real estate investors.  Having connections is everything in this business.  I would never use a vendor that didn’t come referred to me by another investor I respect.  That is the easiest way to get burned, guaranteed.  By networking you are also going to find the best people to put on your superstar team like your attorney, accountant, mortgage brokers, realtors, etc.

There are many other things you need to learn as an investor to overcome some of those fears but if you know what a house is worth, what type of work it needs and you have friends to help you along the way your fears will begin to subside.  I can tell you from experience it never completely goes away.  The only way to get past some of those fears is to take action.  I hope you do, for your financial future. If you want the steps to learn just what type of investing is right for you then check out our FREE CD for the solution.