3 Pitfalls to Avoid When Playing in the Real Estate Game

3 Pitfalls to Avoid When Playing in the Real Estate Game

So we have all seen the late night infomercials or attended a hotel meeting with the guy grinning ear to ear waving his rock-solid no-money-down rags-to-riches real estate investment course for 3 easy payments and you were thinking, “Damn, that looks like a great deal, if they can do it, why can’t I” While I am not saying those guys are not telling the truth, however regardless of which course or school of thought you buy into there are several key areas that one must avoid when engaging in any real estate related transaction.

Pitfall Number 1: Do NOT Overpay!

The whole point in investing is to find properties that are undervalued. How does one find out what is undervalued versus overvalued? Without getting into technical details, the bottom line is you need experience. Yes, much like shopping…You must enjoy looking for and finding great deals. Real estate is essentially one of the highest priced purchases of one’s life. It is advisable to stick with one market, perhaps the one closest to you in proximity as a starting off point. Through your experience and asking the right questions, you will eventually have a feel for the pulse of the market and you will be able to spot a property that is undervalued and act on that information.

Pitfall Number 2: Know the Market

Yes, you are actually going to have to do more work! This part is really common sense though, but executing it where the beauty and the payoff comes in. How do you make money in real estate? The most basic way is to buy low and sell high. So from the first step, you have identified general trends in the value of homes, and are pretty good at spotting undervalued homes. Assuming you acquire that home, you may want to profit from it by selling it off to someone else for a higher price. How can you do this? Well there are many ways. For one, most markets appreciate in value over time so if you want a longer term approach that will work. Making upgrades to the property will automatically raise the price of the home as well. Think in terms of what the market wants, not what you personally want. You are not the one buying it; you are trying to sell it to someone else for a higher price than you bought it.

Pitfall Number 3: Know Your Budget

It may be a fine philosophy to go through life on a whim, but real estate is serious business, and therefore diligent financial planning and budgeting is critical to your success. You don’t need to be a finance geek, however you need to be disciplined and know your budget from the onset, or you may find yourself quickly over your head. Think ahead as to what is needed before actually going forth with investing in real estate.

Hopefully these tips are helpful on your real estate investing journey. And if you are looking to passively invest in real estate and earn a minimum of 8% return on your capital than contact Swing Real Estate by clicking here.


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