As a real estate investor and advisor, I often see novice investors making the exact same mistakes. As a result, I decided to create the following list to help newbies understand what these common mistakes are and how to avoid them. The good news is that all of these errors can be easily fixed. The bad news is that each of these mistakes will seriously limit your potential for success. In my experience, here are the 9 most common mistakes novice real estate investors make:
1) Do not study
Getting an education is an essential part of becoming a successful real estate investor. It is much easier and cheaper to educate yourself than to make mistakes in the real world. We are fortunate to live in a country full of educational opportunities for whatever task we want to undertake. Surprisingly, however, not everyone takes the initiative to learn before they act. This exposes these people to costly (and sometimes fatal) mistakes that could have been easily avoided. Some misguided people even complain that books, courses or seminars promoted by real estate experts are too expensive. I guess it depends on where you are standing. They seem cheap to me compared to what I know there is to gain in this business. Perhaps for a novice, however, they may seem expensive. But as the saying goes, “If you think education is expensive, try ignorance.” Think about it. Is a $500 course worth it if what you learn only earns you $5,000 in one wholesale offer? What if you could save just $5,000 on just one drug rehab? Or what if it helped you create an extra $200 per month cash flow on a single property for just one year? Is it worth it? The value of an education is often not revealed until you step in and engage in the game.
2) Not being educated by the right people
The Internet is a great tool. But it’s also saturated with too much information, both good and bad. Often from less than credible sources. Do not confuse the information you find on the Internet with necessarily quality information. For example, there are a number of real estate investing discussion groups and blogs that have proliferated on the internet. Many of the so-called experts on these sites are more than willing to share enough information to get you in trouble. Are you sure you want to get your information from “rei-man-TX” or “investor-guy75”? Consider carefully if these sources of information are really reliable. I can’t believe some of the misinformation I’ve seen on these sites. Remember, anyone can post to a newsgroup and anyone can start a blog. But just because someone has a blog doesn’t necessarily mean they know what they’re talking about. The misinformation you receive can be costly… either in lost revenue or lost reputation.
Newbie investors may also get misinformation from friends or family. Maybe they dabbled in real estate at some point. They now feel empowered to tell you how little they know about real estate investing. Be very careful with people who have “touched” anything. Amateurs are rarely experts in anything. As the saying goes, “the jack of all trades, the master of none”.
3) Do nothing
If you’ve been successful in getting a good education from a good source, the next step is to take action. Knowledge is only power once you begin to apply it correctly. Simply buying a wide range of real estate investment products or attending boot camps will not earn you money. Some newbies refuse to take action because they’re still looking for that magic secret that will make the offers start rolling in. The real secret is hard work! Others are paralyzed by fear of what might happen if they get one of their offers accepted. Or, they can stop bidding if they don’t find instant success. Whatever the reason, not taking consistent action is a sure way to fail at anything. Personally, I think initial failure is the universe’s way of forcing us to make sure we really want what we’re looking for. Ultimately, perseverance is what leads to success. And the longer you persist, the closer you get to success.