Common Investing Mistakes

by James
(Arkansas)

Reading this site, I have found great info. One thing I would like to share is common mistakes I see investors making. The biggest mistake I see is not doing enough research before buying a property. You should look at at least 100 properties before buying one. That's the only way to have the knowledge base to make an educated decision on real estate.

When you don't take the time to look at a lot of properties you don't know the market inside and out. You will have no idea how comparable properties are priced. Once you've seen plenty of properties, you'll have a good knowledge base and it will be much easier to pick the winners and avoid the losers.

Secondly, I see new investors buying the cheapest properties they can get their hands on because they think that's the only way they can build a lot of properties in their portfolio. That's really not a good way to go. It is much better to have a handful of good solid properties in good locations and attracting good tenants, then to have 20 properties in slummy areas that attract bad tenants who might default on the rent.

Thirdly, I see investors over-leveraging themselves way too much. To avoid this, make sure you have at least 20% equity in your properties at all times and you are keeping adequate cash reserves. You need enough cash to survive 3 months of vacancy. Investors who do not stay liquid often crumble in difficult times. Markets go up and down and you need to be prepared to anything.

Hope this helps. Thanks Straight Up for letting me share!