First of all, I want to say, don’t let this be you! Real estate investing is great, and has been proven time and time again to be one of the cornerstones of highly successful people. But getting starting can be very tricky, and you can easily lose your shirt. I saw a great post about this over at MyInvestmentsBlog.com, that gives you 13 high impact things that people do “wrong”, that foil their hopes at becoming successful in real estate.
But I want you to really pay attention to mistake number 9. It says this:
Mistake # 9. Trying to purchase properties that the seller isn’t motivated to sell Comment: i have seen potential buyers continually try to purchase investment properties that are not on the market. This includes property owners with the attitude that “Sure, it is for sale… for a price”. Unfortunately the ‘for a price’ part usually means it will make no financial sense for a buyer.
Story by MyInvestmentsBlog.com (which has since been converted to an Asian owned site, and the source article taken down).
This is the number one killer of any real estate investment. Paying too much for a piece of property. It doesn’t matter if it is a trash heap or a mansion, it has to be put in perspective with the market, and what it is worth. And if you are going to make money on it, you have to get it far cheaper than the market says it’s worth.
The key to being able to find and purchase under valued properties is locating motivated sellers. These are folks that have to move due to job relocation, divorce, financial trouble or other problems that would motivate them to sell at a bargain. Government and bank repossessions can also be a great source for finding these “distressed” properties. Bottom line, if you don’t buy right, you aren’t going to make it as a real estate investor. Oh, and by the way, getting your real estate license can really help drive down the cost and amount of time it takes to get a great deal!