The fastest way to lose money on real estate investments
What is the fastest way to lose money on real estate investments? Paying too much for a property? Select bad tenants? Take out adjustable rate mortgages? It is neither of these. But all of these guesswork can result from not knowing the fastest way to lose money on real estate investments.
Let’s examine the steps a typical new real estate investor can take to start a business.
1. The new investor hires a real estate agent to find him a good investment property. There are good agents that can really help a new investor, but not all are. The agent in this example unloads a house on the new investor who has been in the market for a long time. The new investor is not in love with the location, it seems like a difficult area, but he likes the fact that it is an upper floor and he buys the house.
2. Since the new investor is not handy with tools, he pays the professionals to paint, landscape, and repair the house. It is expensive, but the house now looks nice.
3. The new investor is not a sociable person and thinks that the tenants can take advantage of him, so he hires a management company. He assumes that the company knows what they are doing, which is why he rarely goes to review his new rental property. Later, the new investor discovers that he is not making money from his property. The house is difficult to rent due to the location. And you discover that the management company has been making unnecessary repairs.
The new investor becomes discouraged and decides to cut his losses by selling his home for less than what he invested in. He vows never to see another Carleton Sheets infomercial.
What went wrong?
The critical mistake was that the new investor relied on “experts” to do everything for him rather than learning to do things himself.
The key is not to depend on so-called real estate professionals. It’s best for you in the long run to learn how to do all of these things yourself, just as you would learn all aspects of whatever profession or hobby you have. It’s harder to do everything yourself, but it’s more financially rewarding, more deeply satisfying, and you’ll learn a wide variety of skills that will serve you well throughout your life.
Embrace a new philosophy that takes you in the direction of becoming independent and self-reliant.
My philosophy in real estate is that you make money by paying close attention to detail, finding houses that need repair, adding value by fixing them yourself, renting the property, managing tenants, and making repairs when tenants leave.
I believe in holding on to what I have and being self-reliant. My money is earned in the trenches, doing what many people are unwilling to do or don’t feel like hard work is worth the reward.
But let me assure you, it’s worth it.
If you learn:
1) analyze and identify investment properties that have potential,
2) enjoy doing the repairs and
3) To apply the proven ways of dealing with problem tenants, you will succeed where many people fail.