What sets truly successful investors apart from those who are only moderately successful or – worse – those who prematurely pack it in and decide to give up on real estate investing altogether? Mistakes do it every time. However, all investors are prone to mistakes. The key to moving forward is recognizing those mistakes and working proactively to keep them to a minimum. Here are some of the most common mistakes – and how you can avoid them:
Treating real estate investing as an unusual hobby – Real estate investing is serious business. Fortunes can be made in real estate investing, so treat it seriously. Get a business card and distribute it. Successful investors pass business cards out like Halloween candy.
In addition, don’t neglect to establish yourself as a serious investor. Set up corporation, get a Federal Tax ID number and open a business checking account. You can survive with a personal checking account, but doing so screams “amateur”. Be professional and take the steps necessary to prove that you’re serious about your success.
Thinking that your need for education ended with your first property purchase – Your need for an ongoing real estate investing education is as real as the needs your physician or your children’s teachers have for ongoing education. It keeps you up-to-date on strategies and techniques that you otherwise might never hear about.
Thinking the Internet is a passing fad – For too many investors, being steeped in the “old” way of doing things is costing you money, profits, and deals. 92% of all sellers begin the sales process online. If you don’t have a website, you’re severely restricting your options – and your cash flow. If you have an artery with a 92% blockage you’re a prime candidate for a stroke. Don’t do this to your business.
Ignoring your business credit file – If you have a pulse, you know you have a credit file, but did you know you can build business credit and expand your opportunities? Separating your personal credit file from your business credit file can help you to more quickly take advantage of opportunities, especially if your personal credit is less than stellar.
Another benefit to working to build business credit is that all business creditors don’t require a personal guarantee by you, which means that you won’t be personally liable for all of the debts of your business. An added benefit is that you might be able to get better terms for a real estate transaction with your business credit than you could secure with your personal credit, and it won’t affect your ability to buy a new car when you need one.
Thinking real estate agents and brokers are for “uneducated investors” – A good real estate broker can be one of your best friends. The key is finding one who understands your investing strategy and what it is you’re trying to accomplish. Sure, real estate brokers charge commissions, but if the value of what you receive is greater than the cost, you’ll be money ahead – and it will be reflected in the value of your portfolio.
Being secretive about what you do for a living – Let everyone know that you’re a real estate investor. Everyone. From your accountant to your veterinarian, it’s critical that you let as many people as you can know that you’re actively seeking property. The current credit crunch has some unlikely people in a world of hurt financially.
Most people either know someone or know of someone that you might be able to help out of an embarrassing and time-sensitive situation. Your stock in your community will go up if you can help a friend or even a family member of someone in your sphere of influence. That can pay off dividends now and in the future, so don’t be tight-lipped. Get the word out!
Hiding from the press – You may not think that what you have to say is noteworthy, but your local media may disagree. Newspapers and TV stations are always on the lookout for interview targets and sources for national news stories with a local spin. The press won’t come beating down your door – at first, but once they’re aware you exist and that you are an intelligent, articulate interview subject, they might.
Get the process started. Send a reporter an email explaining a real estate-related concept or principle – keeping in mind that it has to have a local spin. If you’re feeling particularly bold, issue a press release.
While it’s possible to have some success as a real estate investor even if you make some of these mistakes, why would you want to? It doesn’t take much to set yourself apart from the crowd and increase your visibility and your credibility. The fewer mistakes you make the better off you are. Go ahead, correct these mistakes that many investors make and free the entrepreneur that’s struggling to rise to the surface. It’s worth the effort. Go ahead, give it a try!
by Charrissa Cawley