I have made a lot of mistakes in real estate investing. To tell you the truth it the best way to learn because when it cost you money you don’t forget it. Many years ago I ago I was overseeing a commercial project and paid a bricklayer before he finished laying the brick because he said he needed the money. The next day he was not at the project site. This is 35 years later and he still has not showed up. I had to pay twice to get the job finished. Below I have listed some potential oversights that can easily be made in real estate investing.
NOT HAVING CONTINGENCY CLAUSES IN YOUR CONTRACTS
Examples of contingency clauses:
- Inspection- Always a new time to negotiate
- Approval of partner
OVER ANALYZING DEALS AND NOT PULLING THE TRIGGER
- Know your formulas and stick to them
- When you become more experienced you will learn to create within certain parameters
NOT SETTING UP BANK LINES OF CREDIT
- More flexible than purchase mortgages when purchasing and repairing
PAYING CONTRACTORS BEFORE THEY FINISHED WITH REHAB
- Final payment must be tied to whatever governmental inspection is necessary
WHEN SELLING, NOT OBTAINING FROM THE BUYER A PREAPPROVAL LETTER
- As an investor you cannot afford to take your property off of the market for 45 days while you wait for approval
- It screens out the less serious buyers
FAILING TO PREQUALIFY YOUR TENANTS
- Credit check
- Criminal check
- GO SEE WHERE THEY LIVE!
- National tenant data base
I hope this helps you avoid some costly mistakes along the way. Tune in again, for more helpful tips!