Real Estate-6 Deadly Mistakes

Investors in real estate business can make mistakes when the market is up, as well as when the market is down.  When the market is down the results of these errors tend to be even worse.  Just because you have all the money or plenty of back-up doesn't mean you can't make a mistake.

Investors with less money tend to "hype it up" when trying to get others in your business.   Anyone who has something to do with the business needs to have some "skin in the game".

Some of the mistakes investors make are discussed below.  


1. Violate laws of Securities and Exchange Commission: investors get so caught up in trying to make a large profit seeking to obtain a number of other people involved in your business. Violating SEC comes when you promise a guaranteed income investment in real estate.  There are people in prison for doing those things. There are ways to involve others in its investments and one of those ways is to have all parties have some sort of direct ownership in the property.

2. Do through due diligence: you can lose your shirt, omitting a small piece of information, a zoning law. Environmental laws can also be a big problem, so don't ignore discover about these potential problems. A few years ago I found a property where I wanted to build a small apartment building. Everything seemed to be going well, and then I discovered that there was a bird threatened near the property so that I wouldn't be able to build.

3. Starting to construct a commercial building before obtaining licenses for all: many departments of construction will allow you to start building your structure when you get approved site plans, even before all the plans for the project are approved. Don't expect a Government Department actually talk with another Department. You can have as little as 50% chances that everything about their plans will be approved. A friend of mine has a license to install 150 windows. In the middle of your project, the municipality has changed the requirements and he had to move all Windows that he had already installed.

4. Not getting a survey before you buy: need lines property to establish clearly before you buy. Any problems or disputes need to be handled before taking the next step. The former owner may tell you that there is enough land for you to build your complex mini storage unit. He could be right on the zoning of the past, but the property laws may have changed since it last checked. Now zoning laws may require more land to build your complex. Sellers are usually not out to take advantage of you, but it is your responsibility to do your due diligence.

5. Waiting for someone to do your due diligence: This is particularly a problem when you engage in an investment in another State or outside of your area. Keep in mind that nobody cares so much about your money as you do. You can know the laws and problems in your area or State but you may not know the laws of the State that you are looking to invest if you have a partner who lives in another State, then send him a long list of things you want answers before taking the next step. Never assume that someone, even a partner, you will receive all the replies you need and want.

6. Don’t know about the State of the economy of the area: just because its population of area can continue to support an apartment building does not mean that the area where you are looking to invest can continue to support all apartment buildings in this local area. Learn more about the unemployment rate, other properties that are selling, the County plans, growth trends and much more. What good is it owns an apartment building, if there are no renters? This can result in a huge drain on cash. Notwithstanding any other problem that come with a low occupancy rate.



You can't imagine the problems that you may find, especially when you're not prepared. When you enter the real estate business prepared for all kinds of things, you will be much better, make more money and not having a heart attack, however, just because you did not cover all your bases.

More education and information you get about the real estate business you'll be better prepared.   Just because you have all the education, experience, money and expertise to help you there is no guarantee that you won't find problems.

To learn more, check out http://www.propertyinvestinginformation.com
S. Reid PhD