According to a recently conducted survey, majority of Americans consider real estate as the best investment option, followed by cash and stock market. Now that the real estate market is reportedly slowly recovering, here are some tips for those interested to try their luck in the industry.
Failing to plan ahead. According to Bankrate, it's never a good idea to "plan as you go" in real estate. Just like in any other business venture, it's important to have a plan first and then look for properties that fit your plan.
Working backward is never a good idea, according to Andy Heller, an investor and co-author of "Buy Even Lower: The Regular People's Guide to Real Estate Riches." Instead of buying a house first then figuring out what to do with it afterward, Heller suggests: "First, you find the plan. Then you find the house to fit the plan. Pick your investment model, and then go find property to match that. Don't find the strategy after you find the home."
Doing everything alone. According to the same site, another major mistake in real estate investing is "playing the lone ranger." In the real estate business, it is reportedly important to build a team of professionals. It is essential to establish good relationships with a real estate agent, an appraiser, a home inspector and more.
Not conducting sufficient research. Obviously, education is key in the success of any business. It's important that you know enough about the industry and how it works before you dabble in the actual business. According to Entrepreneur, it's vital to know the difference between real estate investing and the business of real estate. It also reminds potential investors to not let "buying and collecting" information become their endgame. Taking action after research should, of course, be part of the process.
Misjudging cash flow. According to Bankrate, investing in real estate is not as simple as just buying, holding and renting out properties. An investor has to keep in mind that sufficient cash flow is required for maintenance of the properties. Getting a property manager to solve the problem is also not easy as it seems.
It's reportedly common for a property to be on the market for 90 to 120 days before it gets leased. During such time, the owner has to have budget for the property's mortgage, taxes, insurance, advertising costs and association dues.
