Shawn Boday

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3 of the Most Common Mistakes Made in Real Estate Investing

3 of the Most Common Mistakes Made in Real Estate Investing3 OF THE MOST COMMON

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Although real estate investing can be extremely lucrative, it’s also easy to get it wrong. When dealing with properties that can have valuations into the multiple six-figures, a single mistake can end up costing you huge amounts of money. Here are three of the most common mistakes made by real estate investors that you should try to avoid at all costs.

Underestimating Maintenance Costs

When you’re looking at a rental property, it’s all too easy to take too optimistic a view of its potential cash flow. While the income will likely look very attractive once you subtract the mortgage, insurance, and tax payments, you also need to factor in the cost of maintenance. Underestimating this expense is a huge mistake that can turn a property that looks like a huge win into a major loss. Knowing your real expenses and taking them into account will help you determine how much you can pay for the property and how much you’ll need to charge in rent.

Making Excessive Renovations to a Mediocre Property

While improving a home definitely raises its market value, there’s a point of diminishing returns that’s important to consider. Putting too much money into a simple, single-family property will likely make it difficult to find the right buyer and raise your total expenses for the project. Keep your renovations simple and focused on what buyers are really looking for. If you try to get too fancy, you’ll most likely regret it.



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