Real estate investors like you make a lot of real estate mistakes, but there are some simple rules you can follow that will help you avoid making a costly mistake. Here you will find the most common real estate mistakes to watch out for:
Do Not Invest in Structured Settlement Payments – Many real estate investors make the biggest real estate mistakes by purchasing settlement payments from insurance companies and then holding them for weeks or even months at a time. Insurance companies have various terms that they use for structured settlements, such as annuities, cashed in or surrender pays. You want to make sure that you understand how these payments work before investing. Here is an example of a real estate investment that might result in a structured settlement payment not meeting your financial needs:
Rent to Own Property – When you rent a property, you may need to provide the landlord with some type of security. If you do not provide the security, the landlord can choose to foreclose on your rental property. While this may sound like a bad idea when you are first starting real estate investing, it can be a great way to get started. Here are a few real estate mistakes you will want to avoid when renting:
Commercial Real Estate Mistakes
Commercial real estate investors make the biggest real estate mistakes when trying to buy plots of land. Some investors try to “steal” property ownership by offering to rent to them at below market value. You want to make sure that you get your facts straight before investing. While you may think that you are getting a good deal, this may not be the case. It is important for you to keep in mind that if you are going to offer to rent to a commercial property owner, it is essential that you find out what the market value is. By doing this, you will not end up losing too much money.
Avoid Investing in Homes that need a Home Inspection
One of the biggest mistakes that new investors, according to DDP Property, make when they are first getting involved with real estate investing is failing to get a proper home inspection done on a property that you are thinking about investing in. A home inspection is an important part of real estate investing because it will help you to learn about problems that exist on the property as well as any repairs that need to be made. This will help you make the best decision possible. The most important thing to remember is that if you find any problems with a home, you will have to either repair them, or have the home inspected again before you ever consider buying the property.
Do Not Ask Questions
One of the biggest mistakes that real estate investors make is not asking questions. By asking questions, you will be able to gather information that you may not otherwise have had access to. For example, if you do not ask questions about the contract or the seller’s history on the property, you may never know whether or not you are truly getting the best deal possible for your investment. Before you invest in a real estate property, it is important that you do as much research as you can and ask all of the important questions. By not asking questions, you will not only miss out on finding the best real estate deal, but you may also miss out on an opportunity to make the best deal possible on your next real estate investment.
Rent Office Buildings
When you are looking into investing in real estate, you need to avoid renting office buildings. There are a few reasons for this, but the first one is that you are going to want to avoid paying too much money for a building, especially if there is a problem there. Office buildings are perfect for rentals, but they are also a very common place where you are going to find bad tenants.
Use A Realtor
One of the biggest real estate investing mistakes that many investors make is that they rely on real estate brokers instead of hiring a real estate agent. Brokers earn a commission, and while they may be good at what they do, they usually do not handle the contracts or check the backgrounds of potential tenants or sellers. While an agent can do these things, they are much more experienced, and this means that they can find better deals. If you are planning to buy commercial real estate, use an agent.