How To Instantly Improve Your Real Estate Investing By Avoiding These 10 Pitfalls

Many seasoned investors are aware of and perhaps have even been involved in money loosing investment property situations such as the following:
"Buying on spec where the project is never built for financial reasons,
"Buying and renovating properties that cost too much and which do not sell because their price is too far above market price.
"Lost property due to unforeseen accidents fire, E.g.
So how do you avoid these pitfalls and the unforeseeable; what are the common denominators at play here. Over the years these are the main ones that I"ve seen occur and experienced the most through repairs and renovations. There are many more that could be added to the list but for arguments sake lets say that these are the worst ones.
"Depending too much on what your real estate agent tells you as far as a resale value. This probably translates into overpaying for the property to begin with. You need to do your due diligence to know what the Fair Market Value is. If you are going to be doing substantial repairs or renovations you need know what the value of the completed project will be. You may find that the project has priced itself out of the current market place for this area! Make sure that you study the immediate area for similar types of properties that match yours and that have been repaired or renovated and resold!
"Incorrect costing of your repairs or renovations costs. You need too be absolutely sure of your numbers; for materials, labor including the budgeting of an extra 10%. There are always surprises! You should have 3 to 4 professional quotations with their accompanying scope of work. Go over the scope of work with each contractor making sure you both understand and are in agreement with their descriptions and timelines before deciding on your final selection. Make sure you thoroughly inspect the property. It means being side by side with your inspector and asking questions on anything that draws your attention or bothers you in the slightest way. Remember inspectors don"t move furniture and they don"t make holes in the walls.
"Under insuring the value of the property. There have been cases where houses have completely burnt down during full scale renovations, sometimes accidentally and other times purposely burnt down. I"ve seen it with my own eyes up front, close and personal. If you not insured on the total value rebuilt new to today"s standards and building codes it will cost you perhaps $50,000 to $100,000 maybe even more depending on the size and luxury built in. This is a situation I lived personally where friends paid $85,000 for their home 3 years prior to the fire which completely burnt the house down to its foundations. The consequences were startling; the $85,000 house cost $145,000 to rebuild. This was due to the changes over time in the building code. Fortunately for them they had the right kind of insurance, their home was rebuilt, better with more amenities and higher quality materials.
"Attempting to remodel or renovate the property yourself while living in it. This kind of situation can cloud the original intentions you had because it becomes personal. People get attached, they add expensive upgrades that are far to expensive and really not required. In so doing they loose sight of their original strategy for achieving a very good profit on the resale of the property. So stick to your plan, your scope of work and of course your budget! Remember what gets measured gets managed, yes?
"Over estimating the finished product value of your repairs or renovations. Remember that value is the money other people (Buyers) perceive and are willing to pay for your investment. If you just completed renovating a $200.000 property and want to sell it for $300,000 and the market price for the area is $235,000 to $250,000 you will wait a very long time before you sell. So again know your market area and make sure you predetermine the numbers.
"No Investment Strategy taken into consideration for your money and the time it takes to turn around your property. If you"re taking 6 months at a time to renovate and upgrade your properties for resale, it means you"ll probably succeed at one maybe two projects in any given year. This may well be comfortable for you, however consider that you could achieve your financials goals in a shorter time frame. With better planning you could probably double, maybe even triple your output to five or six properties a year! All this by not living in them and reducing your project timelines. Remember time squandered is money lost as well, don"t forget you"re paying interests and holding cost during the time you"re renovating.
"Don"t fall in love with the bricks and the mortar, the neighborhood, the schools or amenities it"s only a house. If you are buying in upscale neighborhoods be prepared to pay a premium in price as well. Don"t forget this does not guarantee that you will make a fortune on the resale. Remember you"re investing in the property to maximize your profits either by flipping it after substantial repairs or renovations. If you decide on holding it long term for rental income will this investment justify the required rent? Remember you want only positive cash flowing properties to give you at least 15% cash on cash returns?
"Once you"ve crunched the numbers and know exactly that it is a viable project, doe not hesitate. Timing and action is everything and equals opportunity for profit. Hesitation in good markets presents excellent opportunities for seasoned professional investors to scoop it up under your feet making your intended profit. All this while you justify if you should or shouldn"t; to make money you have to be invested in the game.
"Don"t be caught up with you have to know it all, the education and courses are important yes. However if you stay on the sidelines observing the game what good is the education, it"s not a game of monopoly? There is always a profitable property investment to be made and timing and action is everything.
"Yes it is true that you can get hurt when you don"t understand the fundamentals of investing. However that"s why you"re here reading this blog, connecting yourself to the right people, like minded people, experienced people. This is how you can shorten your growth curve saving yourself time from others experience. Find out more on how to conduct in depth due diligence and the key steps to investing.
I invite you to study my zen investing methods tried and true from my own personal experience. Follow me with my 10 years of professional investing and methodology for finding the right investments. I am located in Montreal, Quebec, Canada. Make sure you sign up for the monthly newsletters and blog.