The Biggest Mistakes of Real Estate Investors
One should have clearly defined systems to manage the business with proper maintenance of accounts and the whole thing should be run in a professional manner. One should find ways to increase productivity and efficiency and should look forward to outsource tasks.
The experts also opine that many real estate investors are being observed to be gripped by an unknown fear which is a fear of loss, failure or risk. This fear causes them to lose and even before they experience the gains of the real estate market they are doomed by failure.
1. Mismanagement
People tend to manage properties on their own without hiring a property manager. If one needs to invest in real estate and has numerous properties one needs to manage them properly with proper management of tenants by keeping good relationship with them and with regular inspections and should do all the jobs that should be done as a landlord.
How can this be avoided?
Keep a vigil on your properties and make sure that rules are being adhered to. Check with your tenants and keep scheduling regular inspections and it has to be ensured that problems are redressed immediately and are resolved quickly and efficiently.
2. Deferred Maintenance
Many landlords and property owners refuse to fix things quickly either
1. because it costs them more than what they want to shell out
2. Or they just procrastinate.
This is a vital mistake and causes more grief than can be imagined as problems can only get worse over time. This causes tenants to leave and puts a bad name in the neighbourhood too by the word of mouth. This costs more as the unit has to be kept vacant. It is imperative for the owner or the landlord to keep the tenants happy and earn a good name in the neighbourhood.
How can this be avoided?
The maintenance problems should be fixed immediately after being reported. On procrastination the problems are bound to multiply and will take a toll on the overall business situation. It is advisable to keep a digital diary or a notebook to keep track of the maintenance requests and the dates.
3. Doing it all by yourself.
It may seem that doing it all by oneself will keep the cost down but in actual parlance it’s not so and eventually one ends up paying more in doing everything by oneself which lacks the professional experience and expertise.
How can this be avoided?
The best way to manage this is to know one’s strengths and weaknesses and to take professional help in areas where one is weak. This can be plumbing, cleaning or even management.
4. Underestimating the repair needs and the time.
The repairs have to be estimated properly and should be done in time especially for those who buys properties which requires significant repairs. Generally speaking most of the repairs cost more than estimated and delay causes escalation of material costs. Thus if the time and the cost is not accounted and planned properly it can turn out to be a money pit.
How can this be avoided?
It’s advisable to be a bit conservative in estimation and for the beginners of real estate investment with lesser experience it is better to double the budget for repairs and the timeline too. If this still doesn’t make sense it is always good to hire a qualified contractor who can give you a quote or a written bid amount before the commencement of the work.
5. A tendency to treat Real Estate like a hobby
In strict terms real estate is a business and not a hobby at all as perceived by many investors. They take it for fun and then land up into financial losses and undergo unnecessary stresses. If one is in real estate one should know what the return on investment is, like all other businesses.
How can this be avoided?
One should have clearly defined systems to manage the business with proper maintenance of accounts and the whole thing should be run in a professional manner. One should find ways to increase productivity and efficiency and should look forward to outsource tasks.
6. Don’t let the fear grip you.
The experts also opine that many real estate investors are being observed to be gripped by an unknown fear which is a fear of loss, failure or risk. This fear causes them to lose and even before they experience the gains of the real estate market they are doomed by failure.
How can this be avoided?
The best way to be away from this fear is to educate oneself about a topic, market and all the other details and by interacting, sharing and gaining knowledge from others. The investors learn with each new real estate investment and one’s confidence level increases with the interaction of every new successful investor.
The Conclusion
The experts and the successful real estate investors feel that real estate investment can be quite rewarding apart from the above mistakes that one may commit but should avoid committing the mistake of ignoring other’s advice who has prior experience. What they all agree on is that one needs to learn from the mistakes and listen to others and rectify it early.
The experts also opine that many real estate investors are being observed to be gripped by an unknown fear which is a fear of loss, failure or risk. This fear causes them to lose and even before they experience the gains of the real estate market they are doomed by failure.
1. Mismanagement
People tend to manage properties on their own without hiring a property manager. If one needs to invest in real estate and has numerous properties one needs to manage them properly with proper management of tenants by keeping good relationship with them and with regular inspections and should do all the jobs that should be done as a landlord.
How can this be avoided?
Keep a vigil on your properties and make sure that rules are being adhered to. Check with your tenants and keep scheduling regular inspections and it has to be ensured that problems are redressed immediately and are resolved quickly and efficiently.
2. Deferred Maintenance
Many landlords and property owners refuse to fix things quickly either
1. because it costs them more than what they want to shell out
2. Or they just procrastinate.
This is a vital mistake and causes more grief than can be imagined as problems can only get worse over time. This causes tenants to leave and puts a bad name in the neighbourhood too by the word of mouth. This costs more as the unit has to be kept vacant. It is imperative for the owner or the landlord to keep the tenants happy and earn a good name in the neighbourhood.
How can this be avoided?
The maintenance problems should be fixed immediately after being reported. On procrastination the problems are bound to multiply and will take a toll on the overall business situation. It is advisable to keep a digital diary or a notebook to keep track of the maintenance requests and the dates.
3. Doing it all by yourself.
It may seem that doing it all by oneself will keep the cost down but in actual parlance it’s not so and eventually one ends up paying more in doing everything by oneself which lacks the professional experience and expertise.
How can this be avoided?
The best way to manage this is to know one’s strengths and weaknesses and to take professional help in areas where one is weak. This can be plumbing, cleaning or even management.
4. Underestimating the repair needs and the time.
The repairs have to be estimated properly and should be done in time especially for those who buys properties which requires significant repairs. Generally speaking most of the repairs cost more than estimated and delay causes escalation of material costs. Thus if the time and the cost is not accounted and planned properly it can turn out to be a money pit.
How can this be avoided?
It’s advisable to be a bit conservative in estimation and for the beginners of real estate investment with lesser experience it is better to double the budget for repairs and the timeline too. If this still doesn’t make sense it is always good to hire a qualified contractor who can give you a quote or a written bid amount before the commencement of the work.
5. A tendency to treat Real Estate like a hobby
In strict terms real estate is a business and not a hobby at all as perceived by many investors. They take it for fun and then land up into financial losses and undergo unnecessary stresses. If one is in real estate one should know what the return on investment is, like all other businesses.
How can this be avoided?
One should have clearly defined systems to manage the business with proper maintenance of accounts and the whole thing should be run in a professional manner. One should find ways to increase productivity and efficiency and should look forward to outsource tasks.
6. Don’t let the fear grip you.
The experts also opine that many real estate investors are being observed to be gripped by an unknown fear which is a fear of loss, failure or risk. This fear causes them to lose and even before they experience the gains of the real estate market they are doomed by failure.
How can this be avoided?
The best way to be away from this fear is to educate oneself about a topic, market and all the other details and by interacting, sharing and gaining knowledge from others. The investors learn with each new real estate investment and one’s confidence level increases with the interaction of every new successful investor.
The Conclusion
The experts and the successful real estate investors feel that real estate investment can be quite rewarding apart from the above mistakes that one may commit but should avoid committing the mistake of ignoring other’s advice who has prior experience. What they all agree on is that one needs to learn from the mistakes and listen to others and rectify it early.
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