You are hereBlog / 18 biggest mistakes real estate investors make
18 biggest mistakes real estate investors make
Check out the attached article by John T. Reed for a great read if you are remotely interested in real estate investing or would like a reality check from "get-rich quick gurus" (whom I call modern day snake-oil salesmen).
John was a real estate investor for 23 years. He worked as a real estate agent and as a property manager managing office, industrial, farm, and residential properties. He is also the author of 20 real estate investment books. Reed holds a bachelors degree from the United States Military Academy at West Point and a master of business administration degree from Harvard Business School.
John also has an impressive military record: He volunteered in several units during the Vietnam War which included Special Forces (Green Berets -- volunteered 5 times!) and Army Pathfinders (Pathfinders are the guys who parachute in before the main body of paratroopers and set up beacons to guide the planes dropping the main body of troops later).
John's definitely no Donald Trump, but he sure knows what he's talking about and has even publicly disclosed his real estate track record to prove that he's no snake-oil salesman.
Here is an outline of the 18 biggest mistakes he talks about in the article:
- Getting information from get-rich quick infomercial gurus
- Ignoring risk management
- Overuse of leverage
- Fail to choose a strategy that matches their strengths, weaknesses, and resources
- Overstate your return
- Ignoring the value of your time
- No exit plan
- Rely totally on market wide appreciation for profits
- Paying huge transaction costs
- Misunderstanding inflation
- Little real expertise
- Underestimating the value of a good reputation
- Failure to know the history of real estate investment
- Being too wimpy about raising rents, firing unsatisfactory employees, and enforcing leases
- Overimproving properties
- Not getting big enough discounts on purchases
- Relying on an accountant to do tax returns
- Procrastination
Hi Annie, I'm assuming that you're referring to the plan proposed by the Obama Administration. If that's the case, I agree with you but I don't see it possible given the dire reality of our economy... So many non-investor homeowners are already struggling to pay their mortgages and bring food to the table and government resources are limited (consider our staggering national debt!). As a result, a plan that also helps real estate investors and individuals with multiple homes stay afloat may be wishful thinking. Of course, I may be wrong, but that's my 2 cents.
It is my opinion that the new Homeowner Affordbaility and stability plan misses a key element. I believe that it should have included a tax break for investors buying homes and holding them as rentals for 5 yrs.