Mistakes to Avoid in Real Estate Investing - Part2

By Adam VanBuskirk

Entering the real estate market as a real estate investor can be a challenge; Receiving funding, getting the residence rented, setting up bank accounts, figuring out how to handle utilities, etc. The list doesn't end. Of course, if one has done their research before beginning, the above tasks aren't near as complicated as they sound. However, often the same mistakes plague new investors as they begin to experience the field of real estate investing instead of just reading about it. Below are five more of the most common mistakes that people new to the game tend to repeat.

1.) Taking on the Role of Maintenance Man - If one is mowing lawns, showing properties for rent, meeting with tenants to sign leases, fixing leaky toilets, etc then they are not spending time looking for more properties or fishing with their family. Although it is a good way to save money (doing all of the work), it quickly turns the investment properties into a part-time business, and lets face it, if we wanted a part-time job, we could bag groceries at the local supermarket. Manage the finances well, but when the time comes that one can afford to pass the day-to-day work onto a part-time maintenance man and/or property manager; do it!

2.) Getting Caught up in Material Things - Many people want to have what the Jones' have. Don't spend the profits from the real estate investments on new cars, clothes, and junk; at least not at first. Just like any other business, one must be an entrepreneur to start form scratch and create an empire. This can't be done if all of the profits are getting blown on material things that do NOT build wealth, rather they deteriorate it.

3.) Buying High - Just like stocks, most of the money in real estate investing is made during the purchase. If one pays to steep a price for the property, their profits will be damaged until they either sell the property or pay it off. Be very, very careful and intelligent when purchasing a property. If time is taken and a valuable deal made, the property will produce a profit stream and steady rent increases for years to come.

4.) Cheap is Good - There are times when cheap is very good, but there are also those properties that are cheap for a reason; they're health hazards that need to be bulldozed. If a property appears to be listed extremely cheap, make sure a professional plumber and/or electrician inspect the home thoroughly. This will ensure that one doesn’t get stuck with a property that initially cost $25,000. but in-the-end cost $50,000.

5.) Too Little Cash - Cutting one's cash flow to close is a mistake that can cost them their entire empire. Don't get caught with a property that needs immediate attention (roofs, furnaces, walls, bathrooms, etc) and funds that you don't have. Always keep at least 10% of each property's monthly rent as a reserve for future repairs. Try and keep 5% of the rent set aside for any future vacancies that may arise, and always keep at least a full month's rent on hand for paying mortgages. Often the tenants' checks are not received before the mortgages are due, meaning that their needs to be extra money in the bank account to pay mortgages before the rent checks are received.

Be aware of the above five snags that beginning investors often make. Everyone learns form mistakes, but if one can learn form the mistake by reading it here instead of with their first property, then that’s one massive migraine that won't happen.

The author is the founder and owner of LandLordDocuments.com

This article is free for republishing

Article Source: http://articlealley.com/article_53899_33.html

Adam VanBuskirk


	Mistakes to Avoid in Real Estate Investing - Part2 By Adam VanBuskirk Entering the real estate market as a real estate investor can be a challenge; Receiving funding, getting the residence rented, setting up bank accounts, figuring out how to handle utilities, etc. The list doesn't end. Of course, if one has done their research before beginning, the above tasks aren't near as complicated as they sound. However, often the same mistakes plague new investors as they begin to experience the field of real estate investing instead of just reading about it. Below are five more of the most common mistakes that people new to the game tend to repeat. 1.) Taking on the Role of Maintenance Man - If one is mowing lawns, showing properties for rent, meeting with tenants to sign leases, fixing leaky toilets, etc then they are not spending time looking for more properties or fishing with their family. Although it is a good way to save money (doing all of the work), it quickly turns the investment properties into a part-time business, and lets face it, if we wanted a part-time job, we could bag groceries at the local supermarket. Manage the finances well, but when the time comes that one can afford to pass the day-to-day work onto a part-time maintenance man and/or property manager; do it! 2.) Getting Caught up in Material Things - Many people want to have what the Jones' have. Don't spend the profits from the real estate investments on new cars, clothes, and junk; at least not at first. Just like any other business, one must be an entrepreneur to start form scratch and create an empire. This can't be done if all of the profits are getting blown on material things that do NOT build wealth, rather they deteriorate it. 3.) Buying High - Just like stocks, most of the money in real estate investing is made during the purchase. If one pays to steep a price for the property, their profits will be damaged until they either sell the property or pay it off. Be very, very careful and intelligent when purchasing a property. If time is taken and a valuable deal made, the property will produce a profit stream and steady rent increases for years to come. 4.) Cheap is Good - There are times when cheap is very good, but there are also those properties that are cheap for a reason; they're health hazards that need to be bulldozed. If a property appears to be listed extremely cheap, make sure a professional plumber and/or electrician inspect the home thoroughly. This will ensure that one doesn’t get stuck with a property that initially cost $25,000. but in-the-end cost $50,000. 5.) Too Little Cash - Cutting one's cash flow to close is a mistake that can cost them their entire empire. Don't get caught with a property that needs immediate attention (roofs, furnaces, walls, bathrooms, etc) and funds that you don't have. Always keep at least 10% of each property's monthly rent as a reserve for future repairs. Try and keep 5% of the rent set aside for any future vacancies that may arise, and always keep at least a full month's rent on hand for paying mortgages. Often the tenants' checks are not received before the mortgages are due, meaning that their needs to be extra money in the bank account to pay mortgages before the rent checks are received. Be aware of the above five snags that beginning investors often make. Everyone learns form mistakes, but if one can learn form the mistake by reading it here instead of with their first property, then that’s one massive migraine that won't happen. The author is the founder and owner of LandLordDocuments.com This article is free for republishing Article Source: http://articlealley.com/article_53899_33.html Adam VanBuskirk
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