Summary: Making investment mistakes can be frustrating, but knowing what to expect can save you tons of time and money – helping you find financial freedom faster! Today we’re sharing how to avoid 9 common real estate investing mistakes so nothing can slow you down on the way to your dreams!
If we could sum up a major goal for why we do what we do, it would be this…
👉 We want to help people make passive income through real estate investing to create freedom to enjoy whatever lifestyle they choose.
The key thing to note here is that enjoying life NOW means making money FAST. We’re not trying to set you on a path to finally hit your financial goals in your golden years. We want you to get there much, much sooner.
Sooo if we can save you time on your real estate investing journey, you best believe that’s what we’re going to do!
Today we’re sharing 9 real estate investing mistakes that many investors make along the way. By learning what not to do, you can skip these potential pitfalls and secure better returns in less time. 😏😏
When it comes to creating passive income to finance your life and your future, efficiency is eeeeverything. Let’s set you on the quickest path to success by creating a roadmap around the most common real estate investing faux pas.
You don’t need to do it like everyone else, because you have us! You can find financial freedom the faster way. 🙌
Here are the 9 real estate investing mistakes to avoid:
- NO. 1: Failing to fully vet your potential deal sponsor or syndicator
- NO. 2: Not having an investment business plan
- NO. 3: Skimping on the market research
- NO. 4: Having unrealistic expectations for your investment
- NO. 5: Too many eggs in one investment
- NO. 6: Forgetting about taxes
- NO. 7: Skipping over all the legal-ese
- NO. 8: Not keeping tabs on investment progress
- NO. 9: Panicking
NO. 1: Failing to fully vet your potential deal sponsor or syndicator.
The first mistake we want to talk about is a big one. We’ve heard a lotttt of horror stories about getting into bed (metaphorically of course) with the wrong deal sponsors or syndication team.
We’re talking about trusting someone with your investments here – your money 💰, your savings, and your future.
It’s a big deal!
The deal sponsor or syndicator is the person who will guide you through each investment deal. If you’re looking to become a passive investor, this is the person who will be doing the active, behind-the-scenes effort of putting your investment to work.
It’s an amazing thing to be able to make passive income with the right investments, but that can only happen if you can fully trust your team.
So, before entering into any sort of agreement with a potential syndicator, it’s important to know everything there is to know about them – their track record, experience, business plan, goals, etc.
Do your research and ask a LOT of questions.
Don’t worry…the right sponsors will be thrilled that you’re doing your due diligence and making sure they’re the right fit. If they’re stingy with information or annoyed with your questions, let’s just say that’s a pretty clear red flag right there. 🚩
We’ve actually got the perfect guide for finding and vetting your potential deal sponsors, to avoid making this biiiig investment mistake.
Check out Where to Start: Finding the Right Team.
NO. 2: Not having an investment business plan
We’re big planners over here because we honestly believe that preparation is a major contributor to investment success.
Let’s face it. Getting into real estate investing without a business plan is basically like throwing money out into the ocean and hoping it just happens to multiply and float back to shore.
In other words…it’s notttt going to work. 😆
BUT having a clear business plan and strategy for every investment will help you know exactly what’s happening with your money, and how you can get the best results.
It’s important to note that having a business plan that you don’t fully understand is also a mistake that we see from new investors. Even if your plan is to take a back seat and let your deal sponsors handle your investments, it’s still in your best interest to know EVERYTHING about the business plan.
NO. 3: Skimping on the market research
Do you see any similarities between these first few mistakes?
So far, we’re talking about doing your due diligence before aaaany money has even exchanged hands.
That includes doing your own market research for each real estate investment deal.
You want to make sure the deal aligns with your goals and values and is the right fit for you. For any potential deal, check out the location, the surrounding area, the property’s condition, and any applicable market trends for the area.
We know it’s not the most glamorous part, but market research is essential to getting the best returns for your investments. 🤩🤩
NO. 4: Having unrealistic expectations for your investment
Being mentally prepared for your real estate investment is just as important as planning and researching.
You see, too many investors go into deals without knowing what to expect in terms of risks or returns. 😫😫
It’s good to be positive and set yourself up for the best outcomes, but your expectations should also be grounded in realistic expectations.
If you’ve done your research and have your business plan in place, you should have a pretty solid idea of what risks and projected returns to expect – as well as how long it will take to see some income.
NO. 5: Too many eggs in one investment
Investing all of your capital in just one real estate investment deal is a bad idea. Even with alllllllll the preparation and research in the world 🌏, you never want to rely on a singular investment to get you to your goals.
There’s a much better way…
By spreading out your investments across different types of deals and asset classes, you can mitigate investment risks and diversify your portfolio.
You see, if you focus on one deal, you become very dependent on the success of that deal. But if you spread your investment out across multiple deals and properties, you can save yourself a lot of worry. You can also use investment returns from one deal to fund another – allowing your money to multiply even faster. 💵👌
NO. 6: Forgetting about taxes
There are plenty of things that you can aaabsolutely do on your own as a real estate investor. But we’ve seen this mistake a lot, so we have to say it. Do yourself a favor and chat with your tax professional about any potential real estate investments.
It’s true that there are lots of amazing tax benefits for real estate investors.
Just be sure you’re clear on what those are so you don’t miss out.
Tax law can be tricky to navigate, but having a pro that’s versed in real estate investment structures will help put your mind at ease when taxes roll around.
NO. 7: Skipping over all the legal-ese.
We see it alllll the time – skipping over the legal documents and the fine print of investment deals.
And listen…we get it. This part is not super fun. 🫣🫣
But trust us, protecting yourself and your investments is WORTH the effort. We recommend chatting with a professional if all the legal documents are a bit confusing. There are people out there who literally loooove diving into legal docs, who can tell you exactly what you’re signing.
Just don’t rush into any investment deal without understanding what the documents mean, and how they can affect your investment.
Important documents might include a Private Placement Memorandum (PPM), Operating Agreement, or Subscription Agreement. But of course, every deal might have different types of documents to review.
NO. 8: Not keeping tabs on investment progress
Passive income makes it possible to live your life while your money gets to work for you. But that doesn’t mean you want to totally turn your back on your ongoing investments.
Stay informed on what’s up with your investment progress. Ask questions, check your quarterly reports, and stay in contact with your chosen syndicators.
Honestly, this should be the fun part!
Keeping tabs on your investments lets you stay up-to-date on any changes, and keeps you totally in the know about your money.
NO. 9: Panicking
You might think this sounds silly, but we’ve seen this enough to add it to our list.
New investors sometimes get anxious about fluctuating market changes or short-term hiccups. In a long-term investment strategy, the day-to-day changes are nothing to panic over.
Everyone sees ups and downs throughout the course of real estate investments.
The key to staying calm and confident lies in how prepared you were before investing. If you choose the right deal sponsors, make a solid business plan, and do your full due diligence – you should be all set for investment success. 🤩🤩
If you want to feel totally confident in your real estate investments, we’ve got you covered. The great news is that you don’t have to do aaaany of this alone!
We’ve created a full community of amazing investors like you, who are wanting to find financial freedom through real estate investing.
Want to learn more? ⏬
Find out how the Kitti Freedom Club can help you take your real estate investing to the next level! ✨
GET ME ON THE KITTI FREEDOM CLUB
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