Real Estate Investing Mistakes

We always want to talk about our successes, but sometimes the failures are what helps the most! When it comes to real estate investing, there are many ways to make money. There are probably 5x as many ways to lose money! The key is to minimize mistakes as much as possible and double down on the big winners.

Here are a list of mistakes new real estate investors make.

1. Using Emotion

Investing is meant to be a non emotional skill. Money doesn't have any emotions and neither should you when you manage it. New investors are so eager to buy their first property and begin investing. They tend to let their excitement get in the way of good judgement. This leads to looking past problems that can be very costly. More importantly, it leads to buying at a premium even if the numbers don't work. Many times new investors want to buy a deal so bad that they pay a price that they can't make a profit on.

2. Budgeting

Construction management and budgeting is by far the hardest part of real estate investing. Anyone can find lenders, attorneys, and sellers. The hard part is determining a construction budget and managing a project to stay in line with those costs. New investors tend to under budget for a lot of things. Experienced investors know to always have a contingency for extra costs that inevitably come up when you are renovating a property.

3. Lack of Research

The idea has been repeatedly sent out there that buying any real estate will eventually make you money. This is the worst line I've ever heard. The truth is location is extremely important. If you are buying in a low income area or less desirable area, you need to ensure that property is at a discount and you can renovate it for cheap. If it is a high end neighborhood make sure the finishes are quality that would attract someone in that price bracket. Also, keep in mind any developments or areas where crime is increasing. These are long term investments, so you should be very in tune with the demographics you are buying in.

4. Build a Team

Many investors think they can do everything themselves. This includes finding the deals, doing the research, the marketing, the construction, the administrative work, and the bookkeeping. The best decision you can make is to outsource your weaknesses. If you don't understand accounting or finances, you shouldn't be the one making these decisions. If you can't hammer a nail into a wall, you probably should be hiring a contractor. Building a team you can trust is going to jump start your investing career.

Cash for homes pgh tries to be more than just a home buyer in Pittsburgh. Our goal is to add value by educating and working with many other successful real estate professionals in the city. We don't just focus on the acquisition side, but also the construction and sales end. In 2020, we have massive goals to work with many investors in the city!