1. Not Having Money Set Aside for Emergencies
As with most areas in life, how full (or empty) your wallet determines the decisions you make. If you don’t have ample cash at the ready at all times, you could end up making poor decisions when time is of the essence.
Having enough cash at the ready and plenty of equity buffers in place will allow you to make good decisions when the time comes. Saving up money and having options gives you breathing room, as well as a safety net, should something unexpected pop up. If the market isn’t taking care of you for a time, your buffers can.
2. Allowing Distractions
A successful real estate investor doesn’t allow distractions to sway them from their goals. They understands that they will make lots of money, but also have to spend some money in order to keep growing. Allowing expenses and spending to distract you from what you hope to achieve will only lead to failure.
If you feel yourself being distracted by the negative aspects of investing, take a step back and re-evaluate your goals. Remember what you’re hoping to achieve and realize that you have to take certain steps to get there. Keep your eye on the prize.
3. Neglecting Your Investments
Many investors think their portfolios are set-and-forget. The reality is, if you neglect your investments, you’re doomed to fail. While failing to monitor one holding might be possible, failing to monitor a multi-property portfolio is a recipe for disaster.
Take the time to re-evaluate the amount of rent your tenants pay and adjust it as necessary, install smoke alarms, and check mortgage rates to be proactive in the management of your investments. Remember, negligence is a slow and painful death for your real estate portfolio.
Procrastination is debilitating, especially where real estate investing is concerned. Many investors miss great opportunities because the thought of owning another property is overwhelming to them. The easiest way to overcome this line of thinking is to consider the worst-case scenario and then decide whether you can live with it or not if it happens. Many of the pitfalls of real estate investing can be remedied or avoided by strategic planning, so if you plan accordingly, and realize you’ll be alright if the worst does happen, jumping on those great deals when they come around won’t be such an overwhelming proposition.
Whether you’re a seasoned real estate investor or just starting out, be sure you aren’t making the mistakes listed above. If you think you are, take steps to avoid them in the future to ensure your success.