Investing in the real estate sector is one of the common options that entrepreneurs have. However lucrative the option may be, navigating successfully the real estate industry can be quite difficult and frustrating. Real estate investors should particularly be aware of the various risks of property investment to ensure that they steer clear of them. Here are some of the common mistakes that new real estate investors should avoid
- Lack of due diligence
Research before investing in the real estate industry, as well as before purchasing any properties, is highly advisable. Sometimes, however, real estate investors fail to take this step with the importance it deserves. It leads to a poorly planned investment process. The real estate investor may end up purchasing damaged properties or properties whose net worth has been deliberately hiked by the agents.
- Hiring the wrong workers
Real estate investors who target hiring workers to help with property management may find themselves making the wrong hiring decisions. Whereas it is highly advisable to find like-minded workers with a passion for real estate and property management, a rushed hiring process may lead to poor selection of workers. This may jeopardize the ability of the real estate company to succeed.
- Failure in contingency planning
Just like in any other business, contingency planning is highly necessary for virtually every step that one takes in real estate property investments. Failure to invest in a plan B can lead to major frustrations. Among the necessary contingency plans that should be invested in include exit strategies and alternative properties to invest in.
Sometimes, investors may tend to invest more than they should on a particular property. This is the case in instances where poor research is done before making a move to acquire properties. Overspending may also arise as a result of poor decision-making and evaluation of a property’s worth. This may haunt a real estate investor later on as a profit will be highly unlikely.
- The get-rich-quick mentality
Profits in real estate investments, especially in the first few months or even years, may be hard to come by. If an investor focuses too much on obtaining profits in the short term, it is highly likely that they will get frustrated.
About The Author
Jack Nourafshan is a distinguished real estate development professional and entrepreneur in Los Angeles, California. He is the President of Reliable Properties, a real estate acquisition, development and management company in the Los Angeles area. Jack has over 30 years of professional experience that has made him known as a leader in the industry. Jack Nourafshan started a blog on entrepreneurship to share his insight and experiences for aspiring entrepreneurs.