5 Traps That Blindside Rookie Real Estate Investors

space-and-company-philadelphia-property-investmentBY JAMES BRAND (
Think of something you are good at. Got it? Now, think about all the things that tripped you up on your road to getting good at it. You may have learned from these experiences, but I bet you wish someone had told you about them from the beginning. This way you could have recognized them, and avoided them altogether. So let’s take a look at things that hinder new Real Estate investors.

1. Moving Too Quickly

Real Estate investing is exciting. Having your money work for you, gaining financial freedom, and building wealth can really make people eager, but most investors would agree that they would rather miss out on a good deal than sink money into a bad one. This is where due diligence comes into play. If you are considering Real Estate as an investment avenue, that is great! Now it is time to hit the books. Learn all about the strategies, tax breaks, financing, and risks.

2. Getting Emotional

Everyone likes something shiny right? Wrong! When people get emotionally attached to that amazing porch, it clouds their judgment. Emotion is the nemesis of reason, and when it comes to buying investment properties it can stunt your business before it ever has the chance to flourish. Real Estate agents can be your antidote here, as the best ones will be dead set on finding you a great investment and have the tools and experience to do so.

3. Fudging the Numbers

When an investor develops a strategy, he or she may be so tuned in to a type of property or its location that they start adjusting their models to make a property fit what they need. The numbers have to work out, yes, but in order for them to do their job they need to be as accurate as possible. Call utilities, look up tax code, get insurance quotes, know what you can expect and there will not be any surprises.

4. No Reserve

A huge pitfall that grabs hold of new investors is putting everything they have into a deal and not leaving anything in the bank for emergencies. Guess what? Things happen! Trees fall, roofs leak, appliances break, rent comes in late or not at all. Even if a deal is great, if you do not have enough capital in the bank to support it for a few months you may end up liquidating it or other assets to balance your ship. So make sure you have a reserve account captain!

5. Information Overload

Rounding off the lot on the other side of where we started is analysis paralysis, or over analyzing. It can prevent would-be investors from ever getting started. No one wants to make a mistake, and the fear of making one drives us to analyze and evaluate, at times repetitively in a vicious cycle. At the end of the day action yields success, you cannot succeed in Real Estate without actually buying some. So act!

1 Comment

  • Maria Gomez

    Great tips! Concise!

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