Gilbert, AZ (PressExposure) August 17, 2009 -- There are many things that we have all been told so many times when it comes to purchasing a single family home for investment purposes. I am Tom Caldwell a broker and real estate business owner. I have written many articles on this very subject, but this time I am going to look at it from a different angle. Here are just some of the common mistakes I see investors make when purchasing a home. This list is in no way all inclusive, just things that I see that stops people from investing, or worse, making bad investments.
- Paralyzation by over analyzation. Simply put these are people who often like the idea of investing but never invest because they always are over analyzing, and never pulling the trigger. This is not to say you shouldn't do your homework or due diligence, quite the opposite, but once the numbers hit your target, and you have done your other checks and balances. ACT!
- Not educating yourself. This what not to do, is the other end of the spectrum of the above. These are people who understand very little about the investment, how they stand to make money. They just listen to others successes and jump right in getting caught up in the excitement. It is best to understand the investment or don't get involved!
- No exit strategy. I can't overemphasize this point enough. You better have a plan to how you are going to make money from the investment, or in other words your "end game". It is also wise to have a couple of contingency plans. I see too many times where investors have no exit strategy, let alone contingencies.
- Being the lone wolf. I have seen too many times where people try to handle their investments alone, or reinvent the wheel. They are usually educated they see the vision and have an end-game or exit strategy. However, they do not take advantage of the resources around them that come from people who have "been there done that" and have the experience to help them avoid some of the common mistakes that you can't learn just from reading.
- Not being prepared financially. This one is a common problem that I encounter. Too many new investors are educating themselves, have a sound exit strategy, and have teamed up with great mentors or other professionals, yet they do not have the resources to carry out their plan. This stops them dead in their tracks. Many ask, "but what if I don't have the money?". Don't be discouraged. Very few people start their investment careers well capitalized. I will touch on that more in depth in another article, but you must be prepared financially.
These are just a couple of very important things not to do when buying an investment home. At the end of the day, the biggest piece of advice I can purvey is do not let any of these pitfalls stop you from investing in real estate. Even with the latest crash and everything that has happened recently. For those just getting started specifically because of those reasons, real estate continues to be the best investment vehicle I have found.
There is on thing I did not put on the list because it is so big. Just being one on a list does not give it justice. Fear. This single word stops more people from bettering their financial situation than any one other thing. The biggest medicine for fear is education. I believe starting with the list above of the things to avoid, is one more piece to the puzzle of making great decisions when buying your investment home.