Real estate investors all have different motivations when it comes to the properties they buy. A property that one person would consider a good investment might turn out to be a bad idea for someone else. Despite the many differences in the approaches to buying real estate properties, there are still some common ground that every investor can find when it comes to making good decisions.
Don’t Buy Based On Emotion
Some real estate investors have a piece of property they have admired their entire lives. It could be an old office building downtown, or it might be a 19th century warehouse. Every investment you make needs to be based on good research and solid data. If that old office building is a good investment at the asking price, then make your dream come true and buy it. But if it has too much going against it, then you should never make the purchase.
Do Have A Checklist
Consistency is one of the best weapons a real estate investor can have, and a checklist to fill in before buying a property helps create that consistency. Your checklist should contain data about the neighborhood the property is in, the value of the property, the taxes, and anything else you feel is relevant. Over time, your checklist should evolve and become an even more powerful tool for you to use.
Don’t Accept The Published Selling Price
In almost every case. the published selling price for a piece of investment real estate is a starting point for negotiations. It does not matter if it is commercial or residential property; the chances are very high that the seller is prepared to negotiate. Instead of disappointing the seller by accepting their published price, you should make a bid for a lower price and start the haggling process.
Do Learn How To Read Contracts
As a real estate investor, it is smart to have a lawyer on retainer that you can use to review contracts for you. But as a business professional, it is a good idea to learn how to read contracts on your own to help customize your own deal. A real estate transaction agreement can have many different levels to it and an investor will need to know how to use all of those levels to their advantage if they want to be successful.
Don’t Forget Holding Costs
Most successful real estate investors have budgets they work from when they bid on properties. These budgets include the selling price, remodeling costs, closing costs, and various other costs associated with the sale. But you should never forget the closing costs you will have to pay until you either sell or rent your property. Those costs include taxes, maintenance, mortgage payments, and insurance. Without the holding costs, your budget is only partially complete.
Real estate investing can be a lucrative career if you learn how to avoid the mistakes that so many others make. The best way to avoid mistakes is to make a list of the do’s and don’ts of real estate investing, and then constantly update that list as you learn new information.