|
13 Deadly Mistakes Beginning
Real Estate Investors Make
By Robert Lawry
II
|
1. LACK OF ACTION
PROCRASTINATION
Taking the
first step is always the hardest. Many people aren't sure what
action to take first because their mind may be blurred with
too many ideas at one time. Do your best to keep yourself
focused in one or two directions and keep yourself from going
in too many directions at one time.
2. HAVING THE WRONG
PARTNERS
Your
partner's attributes should always complement your own. In
other words, if you don’t have cash, your partner should.
Other attributes may be, knowledge of closings, doing repairs,
an understanding of buyer financing, rental procedures,
etc.
However,
many beginning investors form partnerships with people who
don’t have any better clue what to do and are more broke. The
reason is probably so that they have a buddy to work with,
that will give them positive support and motivation. This is a
disastrous mistake as a beginner trying to learn the ropes and
nothing can be worse than splitting a check after you did all
the work, that is if there is a check to split.
3. FEAR OF FAILURE OR MAKING A
MISTAKE
Some people
don't take action because they are afraid they are going to
make a mistake. Everyone learns from their own mistakes, but
it s better when you can learn from somebody who has already
made the mistakes and can keep you from making the same
mistakes also. Study as many courses about real estate
investing as you can. You help avoid costly mistakes, or
getting a hands on seminar on how not to do something. You
will never learn everything & the real estate field is
always changing. |
Real Estate Investment
Information
Try these recomended resources
for:
Real Estate Investing
Top Work at
Home
Pick for
2007
Perfect
Wealth Formula
Related
Articles on Real Estate Investing:
How to Implement the Lease
Purchase Plan
Benefits of Real
Estate Investing
The Truth about
MLM
How to Buy
Stocks
 |
4. NOT MAKING ENOUGH OFFERS OR
FEAR OF MAKING
OFFERS
You're never going
to buy a house if you do not make an offer. And the more offers you
make, the more houses you will
buy.
Don't be afraid
to make an offer on the property. If you spent your time
pre-qualifying the property and looking at it, then make the offer.
Even if the seller is asking thousands more than what you want to
pay.
Don't be afraid
of the seller being insulted by the price or terms. Let them know
why your offer is what it is. The property needs repairs, etc., bad
area, etc.
Some of the
reasons for not making the offers is fear it will not get accepted
or a counteroffer. Some people say what if it gets accepted but I m
not able to close? The worse thing that can happen is you will lose
your deposit. Other people say what if I get a counteroffer? If you
get a counteroffer, decide what can be paid for the property. If
they are still asking to high of a price for you, counter them
again. If you can't get the seller down to your price range, go to
the next seller. There are always more deals out there.
5. ABUSING
WEASEL CLAUSES
Weasel clauses are
contingencies put into your sales contract so that you have a way
out of buying. Such as "Subject to my partners approval", "Subject
to final inspection", or "Subject to buyer herein, finding a new
buyer/assignee."
Simply put, weasel clauses are for weasels. After all, that’s where
the term came from. Most banks don't even consider a contract that
has a weasel clause and most sales people will discourage the seller
from accepting the
contract.
Don’t make an offer unless you fully intend to follow through and
are willing to loose your deposit if you don't. Otherwise, you
will quickly get a reputation for being a weasel.
6. NOT BEING
ACCESSIBLE
When dealing in
real estate it is always important that potential sellers and buyers
be able to contact you easily. If a potential buyer or seller calls
your phone number and they get an answering machine, they may simply
hang up and that would cost you a deal that could have made you
thousands of dollars. When you do get a call and you re not able to
answer it, make sure that you return their call promptly. If you do
not already have a cell phone you may want to consider getting one.
There are pagers available for as little as just a few dollars a
month, and you should at least have a digital pager.
7. DEALING
WITH UNMOTIVATED SELLERS
Spending too much
time going out and looking at deals you could have pre-qualified and
found out that were not true deals. Don t spend time analyzing a
property s repairs, costs of improvements, closing costs, etc.
before you know you can get a good deal on the property. Before you
even go look at the property, you should know that this property may
be a potential deal after talking to the seller.
8. WAITING
FOR BLOCK HOUSES
If you want to
keep a property as a rental, it’s OK to want it to be block, not
that there is anything wrong with good frame rentals. However, some
investors wait for block houses to fix and sell retail, passing up
very good deals on frame houses. There is absolutely no reason for
an investor to pass up a frame house that can be fixed up and sold
for a profit. There are many home buyers out there that haven’t even
had the word "block" cross their
minds.
Remember, if
you see a frame house that has rotten wood... WOOD IS CHEAP! How
much does a 2 X 4 or sheet of plywood cost? However, when
negotiating with a seller, you always want to act like the rotten
wood will cost a fortune to fix.
9. LACK OF
EDUCATION
Failure due to not
understanding how to invest or not having a good enough education in
real estate. This is, not to say that you need to know every
technique and every thing there is about real estate investing
before you can get started and you will never know everything.
However, it s important to know one or two investing techniques and
master them and not try to be the master of all techniques. Pick out
one or two ways, maybe three ways to find or buy, real estate and
put them to work. Remember to stay focused on those techniques.
10. NOT FOCUSING /
GETTING DISTRACTED
Getting distracted
by other programs, taking bad advice, and listening to negative
thinkers, can kill you chances for success as a real estate
investor. The biggest negative thinkers that you re going to run
into are most likely your closest friends and relatives. They may
say things like "You don t believe that stuff really works, do you?"
or "You don t believe you can do that real estate stuff on late
night TV?" Set them straight right away, that their negative
sarcastic remarks are not welcome. Seek out positive and supportive
people. Also, don't let yourself get distracted by other money
making projects. There is always some new course on how to get rich
quick. Remember that real estate is the number one
"MILLIONAIRE" maker in
America.
It is very
important that you create a system for staying focused and keeping
track of all your leads. Keep yourself organized where you can
process vacant houses as you find them and also process your
potential tenants and potential buyers as they come to you. Everyone
who is going to do this business, needs to have a daily planner. A
daily planner helps you to stay organized as to who you need to
call, who you need to see, who you need to make offers and more. It
is also very important to keep a to-do list in your
planner.
11. NOT PLANNING A
DEAL START TO FINISH
Another reason for
people s failure in real estate is the fact that they do not plan
their deal from start to finish when they make their offer. Many
investors will go out looking for a property that is cheap and put
an offer on the property. When the offer is accepted, that investor
is not sure what they are going to do with the property.
12. DOING REPAIR
WORK
Nothing can be
worse than trying to do all the repairs yourself. The goal is to be
a real estate investor, not a contractor or handyman. Now there s
nothing wrong with doing one or two small things yourself. And when
I say small, I mean as small as changing a light bulb or changing
the door lock on the front door. On a normal rehab, you can hire a
contractor or handyman and have them completely redo the house in a
matter of a couple of weeks. But if you, yourself try to do it,
chances are it s going to take a couple of months. Not only do you
have to pay the cost of the mortgage during the time that you re
fixing the house up, but you re also spending your time doing repair
work instead of finding your next deal. The most labor it should
ever take you to rehab a house is lifting a pen to write a check.
You'll find this business so much easier when you watch other people
do all the dirty work.
13. OVER
DOING OR UNDER DOING REPAIRS
Another mistake
investors make is either under doing repairs or overdoing repairs.
If you under do the repairs on the house, the house is not going to
look nice and home buyers just are not going to want to buy the
house. This is going to increase your difficulties in finding a good
buyer and increase the time that it s going to take to eventually
sell the house.
If you
overdo the repairs on the house, you re going to spend too much. The
goal in real estate investing is to balance the amount of repairs
that you do against what the market place is asking for. If you re
repairing a house in a neighborhood where the average house sells
for $150,000.00, you'll want to put in beautiful light fixtures,
polished brass bathroom fixtures, marble sinks and plush
carpet.
However, if
you re dealing with a rental property in a lower income area, where
the average price of the house is only $50,000.00, you'll want to go
in with standard fixtures that are nice and
presentable.
It does
not take much to make a house look nice, with a little bit of paint,
carpet, and a few door knobs and ceiling fans.
| 
