7 Inconvenient Truths of Investing in Real Estate

Real estate investing can be a great way to build assets and achieve financial security. However, there are some expensive mistakes and misconceptions you have to avoid along the way.

Not having a plan. Some people shop for a “deal”, then decide what to do with it. That’s backward. First, decide what kind of revenue properties you want, how big, how many, etc. Have a plan before you buy.
Not being educated. Before you buy, read as much as you can, study the market, get advice.
Looking to get rich quick. Make sure you understand how much work is involved and how long it will take to realize the significant returns you expect.
Doing it yourself. You’re not an expert. So make sure you have expert support, including real estate agent, appraiser, home inspector, lawyer, mortgage broker, trades people, etc.
Overestimating cash flow. Budget for vacancies and expenses (like property management) that can dramatically reduce returns.
Not doing due diligence. Make sure you use an inspector, title insurance, accountant—do everything you can to avoid costly mistakes.
Not having a Plan B. Sure, you want to earn rental income. But what if the rental market collapses? Make sure you’re prepared with strategies for selling, rent-to-own, etc.