The top 10 mistakes that rookie real estate investors make

Tim Owensby at the Investing Notes blog has put together a great list of top mistakes made by new real estate investors. This list makes for enjoyable reading because all of us have been there at some point or another.

Here is a brief summary of Tim’s top 10 list of no-no’s in reverse order.

10. Thinking things stay the same

Things change. Market conditions evolve, laws change and what worked before may or may not work, or even be legal, now.

9. Remaining a One-Trick-Pony

There is nothing wrong with becoming an expert at any technique or process you use but you must diversify. You should not lock yourself into something so tightly that you cannot take advantage of other opportunities around you. And more to the point, keep yourself from being shaken out because the one trick you learned no longer works.

8. Exclusive Do-It-Yourself Attitude

If you think you have to do everything from buying to repairing to managing to selling, then you are setting yourself up for failure.

7. Not Understanding Economic Fundamentals

To succeed as a real estate investor, you need to understand what drives the investing machine you want to use. Otherwise, you end us under the bus instead of driving it.

6. Misuse of Leverage

Leverage is a great tool or a very dangerous weapon. The difference is determined by how it is applied.

5. Inadequate Cash Reserves

Staying power is critical. Having the ability to ride out an unexpected series of events separates the amateur investing hobbyist from the real professional. The only way to keep yourself from being forced to sell at a huge loss is to identify and keep adequate cash reserves.

4. Paying Retail

if you are looking to build real wealth, you must buy at a discount.

3. Speculation

Speculation has killed the dreams of many people who wanted to be real estate investors. If you find yourself saying, “Well, I know I am paying a premium, but if this happens or that fails to happen or the river doesn’t flood then I will make killing on this deal,” you are speculating.

2. Lack of Tactical Execution

Lots of would-be investors make plans and set goals. Some of them are very detailed and specific.
However, the ones who succeed are the ones who can actually execute on those plans.

1.Thinking There Is Some Hidden Magical Secret Guaranteeing Success

There is no secret to increasing your wealth. You simply spend less than you make on a consistent basis. Then get your wealth to earn more wealth through compounding.