Top 10 Lethal Mistakes Made By Real Estate Investors

Top 10 Lethal Mistakes Made By Real Estate Investors

Top 10 Lethal Mistakes Made By Real Estate Investors:

Canadian real estate investors intend to make very expensive mistakes. The number one cause is a lack of real life knowledge or expertise on Canadian real estate investment from a coach with proven experience. These common mistakes real estate investors make require a lot more than training and coaching to avoid. This article will help you avoid these errors to help you maximize your investment. Following are the Top 10 Lethal Mistakes Made By Real Estate Investors:

Due DiligenceMistake #1: Due diligence

Number one mistake is not going through the proper due diligence process. Professional real estate investors usually do a minimum of 50 basic steps to learn about the property. That includes finding out about the history, neighborhood crime rate, median neighbourhood income, surrounding industries, employment rate, infrastructure changes as well as growth. Drugs and crime bring down the value of real estate.

Creative FinancingMistake #2: Creative financing

Professional real estate investors are able to obtain creative financing at much better rates and terms. Owner financing, balloon payments, zero percent, grants and other available incentives in the mortgage industry can add lot more value to real estate investment.

On the other hand, newbie real estate investors could be dealing with loan sharks as well as private hard money lenders. They end up paying:

  • High interest rates
  • High legal fees
  • Commitment fees
  • Adjustable interest rates
  • High monthly payments
  • Balloon payments
  • Personal recourses

The beauty of creative financing is that everything is negotiable. But no matter what type of financing you use, be sure to learn from experts and negotiate hard and avoid another lethal mistake.

Location, location and locationMistake #3: Location, location and location

Real estate value always begins with location. A great location means higher appreciation and more demand.

The best way to determine is part of your due diligence. The rating of nearby schools and population growth are simple but powerful indications. The people and businesses who will potentially rent or buy from you begin with the location of the property, and then they evaluate other criteria like crime and income per capita. Expensive coffee shops and fancy European cars are also considered a good sign.

Misjudging resale or rent valueMistake #4: Misjudging resale or rent value

Part of your basic due diligence will reveal amazing hard core facts. Don’t believe a word of someone’s opinion unless otherwise backed up by facts. Look into all of the transactions in your market daily using tools like the MLS, and rental vacancies etc. Hire professionals for assistance. For resale value find a very competent real estate agent and/or AACI appraiser. For rental values find property managers with multiple units in your area.

Renovation and repairsMistake #5: Renovation & Repairs

Upgrades, renovations and repairs can be paid by forgivable Canadian real estate grants. Also, be sure to get help from other more knowledgeable Canadian real estate investors or contractors. Learn more by attending a Canadian real estate investor’s apprenticeship.

You can meet fellow Canadian real estate investors in person at local real estate investors networking events:

Source of fundsMistake #6: Source of funds

One should have a 3 to 4 months emergency fund for each rental unit. Life happens and a temporary lack of cash could cause you to lose everything what you have. The market tends to fluctuate, and so do rental rates. There are a lot of forgivable grants available for Canadian real estate investors. For example: flood protection.

Running low on cash usually happens for a couple of reasons:

  • Underestimating repair or renovation costs
  • Underestimating future capital expenses on a rental property
  • Capital expenses are big ticket items like a roof or a heating-air system replacement. If these costs hit you unexpectedly, it can become a big problem.

Investment decisions are fact basedMistake #7: Investment decisions are fact based

Canadian real estate investors have to balance their enthusiasm with cold, hard, and objective analysis.

The due diligence process begins with basic criteria, including general locations, neighborhoods, housing types, construction quality, cash required and positive cash flow. The exit strategy is also part of this plan.

Achieving your investment goals with proven strategiesMistake #8: Achieving your investment goals with proven strategies

Determining your investment goal requires the use of multiple strategies. From acquiring the real estate to selling requires some planning with funds, taxes, benefits and cash flow. You can learn over 35 great strategies by attending a Canadian real estate investment apprenticeship.

Never ignore a professional's opinionMistake #9: Never ignore a professional’s opinion

Professional real estate investors make offers with fast closings, in as-is condition, but with 30 days of due diligence period at their sole discretion.

Here are a few of the important professionals they hire;

  • Professional property inspector
  • AACI appraiser
  • Top notch Real Estate lawyer
  • Licensed local realtor

Learning from other real estate investors’ past mistakesMistake #10: Learning from other real estate investors’ past mistakes

Professional real estate investors invest in their education and coaching from fellow Canadian real estate investment experts with proven experience. They also attend live eye witness, boots on the ground field training to learn in real life setting. Listening and learning is much better than making your own mistakes.

 

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