Common Real Estate Investment Mistakes To Avoid

January 15, 2021 – Real Estate Investing

So everyone is telling you to invest in real estate, however, very few will alert you of the common real estate investment mistakes.  True enough, real estate investing is a great way to expand your profits as these typically have good ROIs.  But not every real estate investment story concludes with a happy ending.

There is still a risk of losing a lot of money, especially if you don’t do property properly. To be successful in real estate investing, you need to have the knowledge and skills to make wise decisions for your venture. 

It also pays to be aware of the common mistakes other people make so that you can steer clear. Here are the biggest mistakes in real estate investment you should avoid. 

1. Lack of planning and preparation

One costly mistake in real estate investing is that most people are unaware that it is more than just about putting your money in and waiting for it to blow up and make you rich. No one succeeds in real estate investing by chance. The most successful investors always start with a plan. After all, you don’t go to a battle unarmed. 

Before taking proactive steps to invest in real estate, make sure you form a solid investment strategy. Your plan should include things like the specific types of houses you’re looking for, how you plan to purchase the property, etc. 

common real estate investment mistakes.

2. Not doing research

The real estate sector is a very complex one, governed by several laws and regulations. If you don’t make yourself aware of the basics and concepts in real estate investing, you can potentially get yourself into a lot of trouble and lose a lot of money along the way. 

Like how you would compare different car models before making a purchase, you also need to do your due diligence in researching your potential investment. Learn as much as you can about the specific property and the surrounding areas, the location, the zoning laws, etc. 

Here are some questions you need to ask yourself: 

  • How likely will the area be developed? 
  • Are the surroundings safe? Flood-prone? Disaster-prone? 
  • Are there issues in the property that may cost you a lot of money to address? 
  • What’s the reason the property is for sale? 

3. Not seeking expert opinion or help

Investing in real estate is not a walk in the park. You won’t be able to understand a lot of things on your own, especially if you’re new to this whole thing. As much as possible, you should be asking for the opinions of professionals who can tell you whether or not it’s a good investment according to hard facts. 

If you want to avoid these common real estate investment mistakes, consult these experts as they can give you a lot of valuable insights

  • Real estate agents
  • Home inspectors
  • Real estate or property lawyers
  • Insurance professionals 

If you’re the investor, it’s hard not to have a bias about the condition of the home. It might look like you’re getting a good deal at first glance, but professionals will be able to spot potential problems and risks that you need to take into consideration. 

common real estate investment mistakes.

4. Overbidding

First-time real estate investors tend to get overly excited about their first investment. And because of that, they make the mistake of overbidding. Or sometimes, you just become too tired of looking for the perfect property that you end up settling. 

Overbidding is one real estate investment mistake, especially if done impulsively without first crunching the numbers and determining if you can really afford it. This can cause you to go above your budget and burden you financially. 

This goes back to the importance of research. Find out how much the property’s actual value is, calculate your budget, and determine if it really is going to be worth the investment. And if not, don’t lose hope! It’s simply a sign that there’s a much better opportunity for you. 

5. Not being prepared for expenses

When computing for your investment, you shouldn’t just consider the cost of the property. You also have to include the expenses that come with it, such as bills, repairs, taxes, renovations, etc. 

These might seem like small expenses, but if you look at them as a whole, they can cost thousands and thousands of dollars. So when you do your accounting, make sure to know exactly how much you can afford and consider all other expenses. 

A lot of people tend to underestimate real estate investing. But it’s not as easy and fool-proof as they think. No matter how equipped you think you are, the only way to really protect yourself and your interests and increase your chances of actually making a profit is to expand your knowledge and skills in investing. Avoid these common real estate mistakes, and you are one step closer to becoming a successful real estate investor.


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