Common Pitfalls in Real Estate Investing

Why Do People Invest in Real Estate Properties?

Residential real estate has several benefits that enable it to stand out from other investments. For example, real property’s base value can rise, while providing owners with a constant stream of rental revenue (i.e. a source of income). Furthermore, real estate investors can exert significant influence over the value of their investments, which cannot be said for many other types of investment. However, interested individuals should remember that real estate comes with its fair share of both pros and cons, meaning that one should be deliberate and manage their enthusiasm.

What Are Some Common Pitfalls in Real Estate Investing?

Here are some common pitfalls in real estate investing:

No Clear Investing Goal

Real estate investors must have well-thought-out goals to guide their choices of investments. This is critical because someone who wants to profit by buying a home, fixing it up, and then reselling it will not want the same kind of investment as someone who wants to earn a stable income by renting out units. Pick the wrong one, and there can be serious financial consequences.

Using Too Much Credit

Like many investments, real estate can be complicated when it is funded in part with credit. This means that individuals need to be thoughtful about how much they borrow, since that money will be taken out of their returns plus interest.

Underestimating Costs

Most residential real estate properties will require some up-front expenditure to make them profitable. Investors who underestimate these costs could end up with unprofitable investments.  Indeed, investors should ensure that their potential investments have been professionally inspected by general and, when necessary specialized, inspectors in order to make sure that they have the needed information to make the right call.

Get in Touch

Someone interested in a real estate investment should consult a qualified financial planner/professional to assess how real estate might fit into their overall portfolio.  To negotiate a real estate purchase contract with the most favorable terms, the help of a skilled and experienced realtor is invaluable.  That is why interested individuals should seek out John Seggerman as soon possible.