These are seven golden nuggets of investment property advice.Take it from an experienced property investor who's battled long and hard in the investment trenches. Or for those of you who have been around for a while, I'm right there beside you in the trenches.
Pitfall #1: Listening To The Real Estate Agent's Advice
In most cases, there really shouldn't be a real estate agent involved unless you're attempting to purchase bank owned homes.Lets' just say there is one. Here's what you need to do. Know than when a real estate agent gets involved in the investment property situation.
The price (without exception) always goes up.
Whenever a real estate agent has been involved, the property information I recieved has been very unreliable.Never trust the information and always verfy everything.
Pitfall #2: Dealing With An Unmotivated Seller
With the current over supply of foreclosures, bank foreclosed homes and REO's in today's real estate market, you will more than likely have more close encounters with real estate agents. Most of them don't know what we need as real estate investors, therefore they really can't help us.
If you've purchased pre-foreclosure properties in the past, you already know you should only be dealing with motivated sellers.Motivated sellers have compelling reasons to sell such as unexpected job loss, prolonged illness and divorce.Your goal should always be to help these people out of these difficult situations and buy these investment properties at really good prices.
Pitfall #3: Not Having Your Exit Strategy In Place
This is part of Real Estate Investing 101, but for some reason many of us still forget about this one.It's like sitting down on the toilet and then realizing there's no toilet paper lying around.Those who struggle, seem to get the order mixed up.Have a solid exit strategy in place BEFORE you put down a nickel on your next piece of investment property.No matter if you plan on selling or renting out the property - begin with the end in mind here.
Pitfall #4: Not having Your Funding In Place
Show me the Benjamin Franklins. That should be your montra for this little pitfall.If you have a good banking relationship, do whatever you can to make it even stronger.You need to be able to turn on that financial faucet when you need it. If you don't have a banking relationship, it's time to pull out the bow flex and begin dating again.
Pitfall #5: Over Paying For Investment Properties!!
If you're paying more than $.50/$1.00 (that's fifty cents on the dollar) for your deals in today's market, you're paying too much.investment properties at deeply discounted prices}.If you pay too much for the investment property, you'll be really sorry.Don't go there - do the math and the math will tell you what to do.
Pitfall #6: Investing In High Crime Areas
Some houses are cheap for a reason.If you wouldn't send your wife and kids into the neighborhood, I wouldn't recommend you invest there.I've made this mistake and it's a lot of extra work and hassle. And get ready to put your track shoes on because you'll be chasing a lot of rent.
Pitfall #7: Following The Wrong Advice
If you're just gettng started in real estate investing, pay close attention where you get your advice from. The most expensive advice in the world is free advice.Free advice really ends up being very expensive.If you're going to follow any advice at all, make sure it comes from someone who has more real estate investment experience than you do.
