Canadian Entrepreneur with Global Invest, on a mission to help people invest in real estate to create generational wealth.
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You should always be prepared to accept the mistakes most beginners make as you take your first steps into real estate investing. However, it is possible to avoid these mistakes with the appropriate training and advice from experienced investors. Based on my personal experience and that of some colleagues, I will share with you some of the mistakes you should avoid making when investing in real estate.
Being Afraid To Take Action
When people ask me about the main mistake to avoid when investing in real estate, I bluntly reply: being afraid to take action, which is usually caused by the people around you and bad advice.
Surrounding Yourself With The Wrong People
By wrong people, I mean those who will try to dissuade you from thriving. Oftentimes these people aren’t versed in real estate and although they have never invested a single penny, they are the ones discouraging you from investing. You don’t need such people around you. Instead, you need to surround yourself with people who inspire, encourage and believe in you. The aim here is to help you overcome your fear of failure because it is only after this that you will have better chances to succeed.
Listening To Negative People
The fact that a relative or a friend has made bad investments does not mean that you will suffer the same fate. Listen to success stories from successful people. What difficulties did they face and how did they handle them? Do not allow pessimists to slow you down. You need to be determined enough to continue moving even when people around you are telling you to do otherwise. You should not be affected by others’ fear.
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Disregarding Training
As a budding investor, you need training. Such training can be done via books, seminars, coaching sessions and much more. If you neglect training, you will almost certainly make common mistakes.
Underestimating The Challenge Of Investing
A common mistake most people make when purchasing a property is to think that investing is child’s play. Sometimes, people fail to ask the right questions before investing. However, with proper training, you can have the confidence to question the information provided by a seller should you need to. It is important to ask the right questions and have all the relevant information about the property you want to invest in. This will help you avoid mistakes when choosing the characteristics of a property and when selecting tenants.
Overlooking Taxation On Property Income
To invest for the first time with the mindset of building up your assets for the future is a good thing, but if you are just starting out and lack the proper training, you might be misled into thinking that everything will unfold exactly as you wish.
Therefore, in order to quickly repay a loan, instead of having to look after your property, you opt for an empty rental. This is a very bad move because furnished rentals are more tax advantageous. With some knowledge of taxation and the rules surrounding vacant property rentals, you can easily avoid this type of mistake.
Making Emotional Decisions Or Sentimental Investments
When making your first real estate investment, you might miss out because of choices made hastily or out of emotion. Your love for properties can be a disadvantage especially when you don’t ask yourself the right questions. Remember, you invest in real estate to make a profit, not to live in the properties themselves. When you fall in love with a property, you may lose your lucidity and end up applying the paint and tiles you like, without considering future tenants or buyers. Remember that the investment in question is not for your principal residence.
Managing Tasks Poorly
When speaking of the mistakes one has to avoid when investing in real estate, I particularly like to talk about task management. When I first started out, due to lack of knowledge, I allowed the people to whom I entrusted my work to plan everything. We arranged for a slow work schedule for a renovation by placing excessive confidence in the craftsmen. I ended up losing precious time and money because my property was on a rental holiday. As a result, I was not nearly as profitable as I could have been that year.
Wanting To Negotiate Too Much
Due to their strong appetite for profitability, some investors often miss out on good deals, but listen: Don’t try to become a millionaire on your first investment. By trying to negotiate too much, you may miss out on a profitable deal. Once you feel the deal is profitable, just try to proceed without wasting too much time.
Wanting To Do Everything Yourself
Finally, one mistake you shouldn’t make when investing in real estate is to isolate yourself and decide to invest on your own. Meeting experienced investors has made me understand that it is easier to achieve your goals when you get closer to your peers. To make your investments successful, you need to be able and willing to trust the search and management of the property to a professional. By doing so, you avoid wasting too much time on a single property.
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