5 Real Estate Mistakes That Kill Success
Watching a business endeavor crumble before your eyes has got to be one of the worst feelings for a businessperson. It’s no different when it comes to real estate investing, which is why we want to help you avoid that. Below you will find the top five real estate mistakes that can kill your chances at success. If you take your business seriously, you won’t want to take these lightly.
Errors in financial forecasts. We wouldn’t wish this upon anybody as it can be a very nasty surprise that quickly kills the profitability of your investment. Financial forecasts are extremely sensitive since there are many estimates to consider. You will need to consider the timing and amount of future cash flows, as well as any expenditures that could arise. Each of these components may affect the current price you are willing to pay and how much you think you will eventually earn from the property. Careful consideration is required in order to maintain an ideal profit level.
Investing without a plan. Yes, we know that many people believe that real estate is a safe and worthwhile investment. As tempting as it can be to listen to this logic and just dive in, we do not recommend it. Just like any other investment, you need a plan. You can’t expect to instantly start earning money through rent, or by flipping the property for a nice profit margin. Without a plan, you are likely to have also skipped the very first item on our list too. In fact, not having a plan will result in putting little to no thought on each of the points on this list, which is why a plan is vital to your real estate success.
Inadequate research, falling behind on trends and market activity. Again, this goes for all types of investments. If you aren’t staying up to date with your market, then how are you supposed to recognize whether or not you’re getting a good deal? This will also affect the quality of your financial forecasts and feasibility of your plan. The bottom line is that you need to be constantly analyzing the market and staying on top of new trends.
Thinking you can do it all yourself without the help of others. This includes not asking for referrals, which is just not a wise business decision to begin with. The real estate industry is very complex so it is strongly urged that you leverage the specialized knowledge of those professionals around you. If you fear having to spend money on their advice, then look at it this way. There may not even be any money to pay anyone (including yourself) if you pass up on their advice and make a mistake trying to do it yourself.
Being supported by a poor financing method. This one can set you up for failure before you even begin. No matter which method of financing you choose –whether it is cash, financing or equity – each has its issues that can affect your success in real estate. If you’re investing with cash, you may want to ask yourself whether you want to leverage this capital to obtain a loan. You also need to make sure you have enough cash on hand to meet all the demands of the investment. As for debt, you will need to assess your cash flow situation in relation to interest payments as they come due. Oftentimes, debt also comes with other conditions stated in the contract which you must adhere too. Make sure these align with your goals and still allow you to successfully execute the investment. As for equity, you will want to find a reliable source that has enough capital available for use. Ultimately, you will want to find a financing method that is most suitable for your type of investment.
And that concludes our list of the top mistakes that will kill your chances at real estate success. There’s no doubt that today's market is filled with many opportunities for the savvy investor. Our Rich Dad Education trainers will introduce you to proven strategies that can help you launch your career as a successful real estate investor and develop a "Rich Dad Mindset."
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