So many investors set out with an idea of what they want to accomplish, only to find out they didn’t spend any time on some things they should have. There are more than three of course, but here are three things you certainly want to avoid.
1. Avoid starting any process without having a lender experienced in the investment side of real estate.
They all say they can do it for you, but most of them are mistaken. Don’t make their mistakes yours.
2. Avoid using your neighbor, the friendly Century 21 guy, to guide you in the analysis and purchase of investment property.
This is a no-brainer. Just because John down the street bought a rental from him last year, doesn’t make him an expert. You’ll ultimately pay not only for what you don’t know to ask, but for what he doesn’t know to look for.
3. Avoid buying locally just because you must be able to drive by your property. Are you buying for growth? If your particular area isn’t growing, then having it near you means you probably took your money out of a 4% CD and put it into a 0% piece of real estate.
OK, everyone in unison – Duh. Get over your control issues unless it’s more important for you to be in control than it is to actually see your capital grow. This may be one of the biggest mistakes beginning investors make.
Getting the wrong loan for the wrong property almost always leads to heartache. After that horse is out of the barn you’re pretty much stuck. Remedies tend to be pretty expensive. If you wouldn’t have your wife’s obstetrician operate on your bad knee, why would you turn over your hard earned capital to the guy handing out refrigerator magnets? Buying local vs going where the growth or cash flow is far superior has always been a mystery to me.
I’ll bet you know of someone who’s suffered as a result of one of these three things.
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“…why would you turn over your hard earned capital to the guy handing out refrigerator magnets?”
LOL – funny. Classic.
All together now:
“I do not want to be a control freak. I want to be WEALTHY…Yayyyyyyyy!!! (Cheerleaders jumping up and down to the sounds of “Stars and Stipes Forever:)
Jeff, did I see a link on this blog where you could order Brown and Brown refrigerator magnets?
Thanks Chris – but don’t tell anyone about the BawldGuy Bobblehead Doll.
Cher – See answer to Chris.
Your second point is dead on. There are countless realtors that don’t have any experience investing in real estate who “try” to tell people what a good or bad investment is. Before giving out that advice, they either need some training or they need to be come investors themselves. The average neighborhood realtor is probably a bad choice for real estate investment advice.
Thanks Josh – Whenever I’m asked to sell a home here in San Diego, I refer it to one of my many home-agent buddies.
Besides, like one of them said to me already this morning – “Jeff, you couldn’t sell homes anyway because you don’t have any magnets.”
Great post- as a lender, the number 1 thing you MUST have before you begin investing is………drum roll………………a great credit score (800+) is ideal, under 700 not so ideal.
We can still get you closed, it just won’t be that pretty
True Goergio, but I bet you’ve turned a lot of plain Jane credit scores into loans.
Thanks for dropping in.