Commercial real estate investing can be a big step to take financially for most people and some common mistakes can be made, especially if you have not taken the time to research your investment with proper diligence. This month, we will continue our discussion on some of the more common real estate investment mistakes and how to avoid them.
Many people make the mistake of finding a great property, and then do not know the next step involved and all the people that play an important role in investing. The idea is to formulate a plan and then find a property that will work with this plan. A smart investor has a team of real estate specialists assisting them. You will want to have a good real estate agent or investment firm on-board to help you analyze the properties and market conditions.
Three important points to consider:
- Team work is crucial – real estate investing is a big step for most people and don’t make the mistake thinking you can do it alone. There are many people who play a key role in making a real estate deal work. Utilize your resources and networking for good advice from people you trust. In addition to a good real estate agent or investment firm, you will need a lender to finance with. You will also want an appraiser and an inspector to evaluate the property in question. Most importantly, you will want an attorney who will review the deal for any hidden problems or surprises.
- Overreaching and thinking you will get rich quick – these two common mistakes you definitely want to try and avoid. Overreaching is when you take a risk that is too high and going for deals too soon, can be risky and get you into trouble. Getting rich quick is also a common mistake, when actually slow and steady makes a successful real estate deal. Be realistic about your finances and goals, and don’t bite off more than you can chew.
- Always have an exit strategy- too many people have found out the hard way when a deal goes south, that you must have exit strategies in place when involved in commercial real estate investing. Without multiple exit strategies, you may end up stuck in a deal that you don’t really want.