Real estate investing can be profitable if you know what you are doing. If you choose to go out there into the real estate field with no knowledge or education about the industry, you could end up losing a lot of money. Having a knowledgeable real estate agent on your side can keep you some major mistakes when you are first starting out. Not only do they know the area, but they also know the real estate market. In an effort to help you avoid some common newbie mistakes, here are some tips to help you begin your journey as a new real estate investor.
Be Wary of Money Pits
It is very common to see a house in a desirable area and think you can make money off of it. The problem with not knowing enough about real estate is that there are so many things about homes that go wrong if you do not know what to look for. Before investing in a piece of real estate, you want to make sure you have it inspected first. A licensed real estate inspector will give you the lowdown on what problems you could be facing once you purchase the house. Everything from termites to a bad foundation could cost you thousands of dollars to repair the damage. While it still may be a great deal, you want to know what you are getting into from the beginning.
Don't Trust Everyone
Whether you plan to rent out the property or hire a contractor to remodel it, you have to remain on guard. Before signing a contract with a tenant, you need to run a background check on every applicant to ensure they have the right credentials. You don't want someone in there who isn't going to pay the rent, but you have to do basic research in order to know what their past history is. The same goes for a contractor. You definitely want to talk to other real estate investors to see who they recommend. Not all contractors are great for just any remodel. Each contractor has their own specialty.
Avoid Rushing the First Deal
Once you have a plan in place to finance your first property, you can get a little over exuberant and force a deal. Forcing a deal may cause you to miss out on better deals. Instead of jumping the gun on the first property that looks good, you want to make sure you run the numbers to see if it really makes sense. Your real estate agent should be able to give you the numbers on how much you could potentially make renting it and reselling it so you have a better idea.Share