How to Eliminate Risk in Real Estate

Welcome to the first in our three part series on the 12 Common Mistakes Made by Novice Investors. You'll learn how to guarantee high rates of return!

Real estate investment has provided many investors with positive cash flow, tax benefits and the satisfaction of making an impact in others lives. However like any investment, real estate has intricate nuances and market trends that, when ignored, can cause an investor tremendous heartache.

Unbelievably, many first-time investors are willing to part with their hard-earned cash without taking the time to study their investment. They rely on traditional trends and gut feelings. Before you risk your investment, take the time to learn all you can about your market. By aligning yourself with the right professional, you can avoid these 12 common mistakes and you’ll ensure an excellent return on your investment.

1. Failure to Determine Your Time Need- Cash flow, capital appreciation, tax benefits, loss of management, equity pay-down and pride of ownership are just some of the things that need to be addressed before you make that investment. A service-minded real estate professional can be a tremendous asset by taking the time to evaluate your needs and making sure you’ve got all your bases covered.

2. Not Checking out the Seller or Seller’s Agent’s Numbers- Claims of extremely high rates of return run rampant in real estate investment. Don’t get caught up in the excitement - check everything: rents, payment history, taxes, expenses, deposits, future modifications... everything! Make sure you have the right agent. It’s like having a good insurance policy against overlooking all the seemingly insignificant but very important details.

3. Forgetting You’re Buying a Business- Owning investment property carries great potential for creating wealth and... some potentially difficult decisions. Evictions, re-investment into the property and time management all need careful consideration. Remember this is not a “hands-off” business.

4. Avoid Negative Cash Flow- Property that eats cash every month can drain your working capital. This creates stress, frustration and can become quite painful. Predicting constant appreciation is extremely difficult if not impossible for the unseasoned investor. A strain on your cash flow may cause you to sell the investment before the benefits of ownership are ever realized.

Stayed tuned for the next in our 3 part series. . .