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Studies have shown that many investors get started in real estate after age 40. It is perfectly normal to be considered a new investor. Every person goes through the learning process of owning investment property. There are some mistakes that are made that are more common than others. What new real estate investors do that pros do not is easy to spot when you know about the errors. If you are investing alone, you might not have experienced professionals that are helping you. Taking a step back and learning all that you can about what not to do can really up your game as a beginning real estate investor.
Common Real Estate Mistakes
Nothing can sour an investment more than buying into a property that was not thoroughly researched. There are many things that can be discovered when researching a vacant or recently vacated investment property. Property tax liens are not uncommon to find when perfomring a title search with the local county clerk. Maintenance or mechanic's liens are also a common form of debt that becomes attached to a property. Properties that are in traditionally low rent locations might not bring enough of a return on the original investment. Doing more research than what you think is necessary will always keep you one step ahead as an investor.
Poor Financial Decisions
There are some investors that get too caught up in owning real estate that personal debt becomes a problem. Putting a down payment on an investment property is easier than many people realize. Banks now require about 20 to 30 percent of a down payment. This means that the initial cost will only be between $15,000 and $23,000. While these numbers are very basic, what must be understood is the length of the loan, the interest rate charged and the amount of rental income received to help pay the mortgage. Additional expenses like construction, pest control, property tax and insurance can balloon the cost of an investment property that is financed.
Lack of Future Goals
Buying is just the first step. What happens next will help decide your future as an investor. It is easy to get caught up and think you will own a property for the rest of your life. Many successful investors quickly move on after 3 to 5 years of owning a property. Your future goals should always be kept in your long-term plans. Knowing exactly how long to hold a property while it appreciates in value will help you earn the highest returns when you do finally sell it. Real estate is a buy and hold business. It is not a get rich overnight scheme.
Doing Everything Alone
The urge to do everything alone is completely natural. It is so natural that almost everyone does it and many fail because of it. Spreading your abilities too thin can cause many problems as a property owner. Learning how to outsource the most time consuming tasks allows you to concentrate on making money. The legwork jobs like phone work, property management, hiring contractors and taxation can all be completed with the help of experts. The more time you can spend on becoming a great investor the less of a risk of a failure.