What not to do in real estate!

Never to give up on yourself and always find a way to out do yourself everytime..

about what you do or have done and how much you know

Nothing worse than a mofo that can't tell the difference between a short sale and a bake sale

"yeah when I closed on my last house, I paid cash.."

"ok so it shouldn't be a problem presenting a POF then..."

"ok. so I present it when I close right???"

The last thing anyone needs in their life is a rep as a mofo lol.

That's got to be the nail on anyone's RE business's coffin if they lie their butt of to get started.

Great Advice Elix thanks.

Nothing is worse than dealing with someone who "talks a good game", but can't provide any back up to support it.

Teamwork is where it's at in my book. I lOVE working with investors! REAL investors that can provide POF and are interested in making money on their money.

There's such opportunity out there in the market today, but be honest and forthright with your intentions-UP FRONT please.

Character and integrity COUNT!!! AMEN to all of the forthright people learning the strategies of real estate on the DG site. MAKE IT HAPPEN!!!

leehomes thank you for taking the time to post,

You are right, as investors we need to back up what we claim Character and integrity is key.

Teamwork is also key, no one can do everything on their own. Being able to work with others is important.

What other common mistakes are out there?

Don't be like "let's do a deal together, you find the house i'll get the buyers and then we split"

I find the houses.....plural. You still searching for homes

Sellers is waiting

I then find a buyer. You're still 'searching'

I find another buyer. You're still.......

Come closing you ask how much you're part of the fee is

GTFOH!!!!

You want a check, you earn a check

No leaching allowed

(waiting for over 45 minutes for a meeting with a client. Not happy but thats the way it is sometimes)

If you know you don't know any investors for higher priced homes ($500k+), or don't feel comfortable speaking with someone who deals in high-end RE, keep it real and admit such as to protect yourself from future embarrassment.

Nothig wrong with bringing someone experienced into a deal and splitting. Better to walk away with something than to walk away with nothing and looking foolish

I personally have no problem splitting a deal if I can't or don't have the time to finish the deal. I believe in volume so whatever I give up from one deal can easily be made up from another or others in the pipeline.

Get the property inspected thoroughly! DO NOT BYPASS THAT! Whether its a licensed contractor, a home inspector, or if you know enough about construction and issues that arise with a house. Many times the couple of hundred it takes to inspect a house, the inspector will find double what you paid in things that you didn't know about. You'd don't want to be surprised during renovation with something you didn't know about that will cost an extra couple of thousand. Remember, you make the profit when you BUY the house, not when you sell it!

Real estate in my opinion is the best way to make big profits, ongoing cash flow and secure your future BUT also is not easy. A lot of people think that is minimum the efford require to do the deals and after trying it for a while with no results they give up and end up saying that it doesn't work. The way I look at it in my case is when I went to college and spend (or invest alot of money) in my education and did a lot of sacrifices and for 5 years I did not make any money but after that I was able to get a good job and climb the corporate ladder well now comparing it with Real Estate I starter learning 5 years ago and on those 5 years I have been able to make good profits and I still hold some properties that are giving me cash flow every month with a minimum efford from my part (a true passive income) and this is just the begining of something big I can see now. So in conclusion don't beileve is easy but for sure is well worth every efford you do because with out knowing every experience you obtain even the bad ones are making you grow and you will be closer to become succesefull.
Daniel

by William Bronchick, JD

"Real estate investing fever" has hit like a plague."

Zillions of "newbie" investors are jumping on the bandwagon trying to make a profit after losing big in the stock market. I meet them all the time, and many are making big mistakes!

Mistake #1: Stock market mentality

You'd think after losing $7 trillion in the stock market, people would have learned! Nope, they are making the same mistake, which is assuming that what happened yesterday will happen tommorrow. Nine of ten new investors I meet say they are interested in real estate because they saw someone else make money from the rapid appreciation of the market over the last few years.

But, buying real estate solely for short-term appreciation is often a big gamble! If you buy real estate to hold for fifteen years or more, the chances are that you will come out on top. If you buy a property and flip it in within a year, you'll probably do fine, too. And, despite the risk, many people can intelligently time the "boom" of a local market (or subdivision within a market) and make a profit.

But, if you buy a rental property for full-market price with break even or negative cash flow, you'd better have a backup plan if the market doesn't keep going up. Investing is a lot like surfing; if you don't know how to ride the wave, you will drown!

So, should you refrain from investing if you think the market has peaked? Absolutely not! You can find bargain-priced properties in every market, even the hottest. You can find low-interest rate financing that will increase your cash flow, so if values drop, you still are covered.

You can plan short-term (six to twelve months) because markets rise and fall slowly. And, if you keep a cash reserve for your business, you won't sweat when the market tanks. You know that in the long run, real estate markets virtually always come back.

by William Bronchick, JD

Mistake #2: Investing blind

You'd think after losing $7 trillion in the stock market people would have learned! Nope, they are making the same mistake--blindly buying real estate based on **** advice or complete lack of education.

Real estate is one of the few investments in which risk is directly proportional to knowledge. True, it has a higher learning curve than investing in the stock market, but there's no proof that having knowledge of the stock market reduces risk (just ask your mutual fund manager).

I read a comment on a real estate discussion group on the Internet. In response to an inquiry as to whether a particular seminar or training program was worth the money, someone answered, "Why waste your money on that stuff? Just use your money as a down payment and learn as you go."

This is probably the worst advice you could ever give a beginner. Money for deals is easy to find if you can find good deals. But, you won't know what a good deal is without having first invested in your education!

The more knowledge of investing techniques, financing, acquisition, negotiating and, of course, your local marketplace, the less risky your investments will be. A bargain real estate purchase will generally always be a safe investment; a bargain stock purchase isn't. After all, who says the company you bought into will be in business next year?

by William Bronchick, JD

Mistake #3: No cash reserves

Ask anyone in real estate long term (or any other business, for that matter), and they will tell you the two most important words for survival are: cash flow. Heck, even K-Mart failed to learn that valuable lesson!

In order to stay in real estate long term, you need cash reserves. Buying real estate nothing down is easy; handling negative cash flow, repairs, and other expenses in the meantime is the trick. In fact, if you can handle the bad times, you will always come out on top.

Lack of cash reserves puts unnecessary pressure on you to do substandard repairs, accept less than qualified tenants, and give into tenants' demands for fear of vacancy. When you have a sufficient cash reserve, you act rationally.

You hold out for a higher sales price.
You hold out for a qualified tenant.
You leave properties vacant rather than accepting unqualified tenants.
You call a tenant's bluff when they threaten to leave.
You take care of necessary repairs and improvements on your properties.
It's a whole different ball game than operating from a lack of cash. Like I said, buying properties with no money down isn't hard; it's handling the cash flow. In other words, you can buy real estate without money, you just can't survive in business without cash reserves. Consider accumulating cash reserves before investing in rental properties.

by William Bronchick, JD

Mistake #4: Being greedy

Many investors get started flipping properties to other investors, which is a good idea to generate cash reserves. However, you must be realistic about how much profit is in a deal.

If there is a potential for a $20,000 profit in a rehab project, you can't expect to make $10,000 flipping that property to a rehabber. A rehabber has a huge risk embarking in such a project and wants a large enough profit to justify the risk.

For example, if a house needs $10,000 in repairs, and the rehabber investor wants to make at least a $20,000 profit. If you find a deal with $20,000 in profit potential, how could you expect to get $10,000 for flipping the property if the rehab investor is only going to make $10,000?

You should be happy making $2,500 and moving on to the next deal. If you want to make more than $2,500 on such a deal, then you must find and negotiate a better bargain that has more profit potential.

by William Bronchick, JD

Mistake #5: Treating real estate as anything OTHER than a business.

People are lured to real estate because of the quick buck it promises. Don't hold your breath--you won't get rich quick. An "overnight sensation" usually takes about five years. More than 90% of the people who take a real estate seminar quit after three months.

Why the high fallout rate? Lack of action and unrealistic expectations. Investing should be treated with the seriousness of a career. It takes months, even years for a business to cultivate customers and have a life of its own. You need to treat real estate like any other business.

Give yourself at least six months to see if real estate works for you. It may even take a year before you buy your first property. Maybe in the second year you will buy three or four properties. If you work hard at it and keep your eyes and ears open, you may even find your first deal in 30 days. You will not make money by talking or thinking about it; you must go out and take action.

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