Top 2 Mistakes Made by Real Estate Investors

Those who want to invest in real estate will have bumps in the road. This said, there are two common mistakes in real estate that happen time and time again. Why do they happen so often? Because people are not realizing they are making mistakes. So, to  help real estate investors, here are the top two common and repeated mistakes;

1.  Living with bad financed deals because of eagerness.  There are a large number of exotic mortgage options for people with bad credit, no credit, or good credit but not good enough to buy multiple houses. The purpose of these mortgages is to allow buyers to get into certain homes that they might not otherwise have been able to afford using a more conventional, 25-year mortgage agreement. Really, these options are like the Pay Day loan companies – for the most part- but servicing the real estate market.

Real estate investors  who secure adjustable/variable loans or interest-only loans eventually pay the price when interest rates rise. The point is that home buyers should make sure that they have the financial flexibility to make the payments (if rates go up).

2. Investing IS expensive and your ROI is not immediate. It sounds obvious, but most investors feel they will bounce back money quickly- and with little investment, too.  What real estate investors need to understand is that unlike renting, there are maintenance expenses that go along with mowing the lawn, painting the shed and tending the garden- even with a property management company. Then there are the costs associated with furnishing the house and keeping all of the appliances (such as the oven, washer/dryer, refrigerator and the furnace) running, not to mention the cost of installing a new roof, making structural changes to the house, or other little things like insurance and property taxes.  These expenses have to be considered when investing in multiple real estate properties.

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