So You Want To Do A Real Estate Investment, Eh?

Before I get into the three real estate investment mistakes you must avoid at all costs, I want to take a moment to point out the reason I used the Titanic in my analogy here. You see, the people who built the Titanic and the man who captained the ship were seduced by the idea that their newly built vessel was unsinkable. It caused them to idiotically forge ahead and ignore the little things that could have prevented them from the fate with Davy Jones' locker they eventually met.

This is no different than what real estate investors face. I've been involved in over 398 real estate investment transactions from every possible angle conceivable - as an investor, agent, broker and lender. In every case of failure, the investor thinks he/she knows more than they actually do and idiotically ignores the little things. Don't be that guy or gal!

With that being said, here's the biggest mistake I've seen that causes real estate investors to go belly up: overvaluing a property. Investing in real estate is much more different than buying a home you will live in. And many investors recognize this from the get go. The problem is that they still get emotionally attached to a property - just in a different way.

They get hyper-focused on what they want to make for a profit and that's always driven by what they believe the value of the property will be once it's rehabbed. So they will go around looking for ways to validate their beliefs instead of using independent property evaluators to determine the after repaired value.

The biggest culprit of false values is Zillow. Zillow gives more real estate investing false property values than any other place I have ever seen. Rarely is their site accurate to current market conditions.

Mistake #2 - drafting the purchase contract. When you do find a property at the right value, it's vitally important to construct your purchase contract properly. That means making sure you give adequate time for inspections and adding contingencies. I see so many people lose out on their earnest money at this point and then lose the deal simply because they didn't give themselves enough time to get inspections done.

Mistake #3 - underestimating the rehab process. A whole bunch of fools see the TV shows and think they can come into a house and do all the rehab themselves. Most of these clowns have never done all the work that's needed to rehab a house. They get started, can't finish and have to hire a contractor anyway. They lose so much money and more importantly time. Many will end up defaulting on their loan at this point too.

So there you have it, the three crucial mistakes that will make a real estate investor lose their shirt. Now I realize the tone of this article has been 100% negative, so what I've done is write an article on my website that will give you the three pillars of success to investing in real estate during a down economy. Just click this link to read it now: real estate investment pillars of success.