Although the rewards can be high in the real estate game, the financial risks are also real. When looking to enter the market of real estate investment, it is critical that all avenues are explored and all precautions considered. Here is a list of a few of the top mistakes that rookie investors making when jumping into the real estate market:
NOT BEING AWARE OF DAYS ON MARKET (DOM)
This crucial statistic is one of the best indicators of the health of the market. A higher DOM generally demonstrates that the market is more buyer-friendly while a lower DOM is an indication that a market is more difficult to crack. Knowing these numbers for your region and keeping tabs on their fluctuations will greatly increase your odds of success.
CHOOSING THE WRONG PEOPLE
When flipping houses, it is especially important to find a stable crop of quality contractors to do the dirty work for you. Ask around to trusted colleagues for recommendations and then ensure that the candidates are properly vetted. Hiring the wrong contractor can end up busting a budget and wasting precious time. And in a business where time is money, that is a losing proposition.
NEGLECTING TO LEVERAGE THE MLS
With the popularity of sites like Zillow and Redfin exploding in recent years, many realtors are moving away from the traditional MLS listing. Neglecting to harness the power of the MLS is a big mistake. As the host for the largest pool of real estate properties, the MLS still holds the greatest power in the market. Not leveraging this service could prove to be detrimental to the success of your business.
NOT CREATING A COMPLETE BUDGET
Before jumping into the real estate market, it is critical to plan out a complete budget, taking into account all possible pitfalls and roadblocks. Failing to do so can negatively impact both your current project as well as your potential for success in the future.
FORGETTING TO OBTAIN THE PROPER PERMITS
Although the red tape can be tedious, savvy real estate professionals understand the importance of following the rules when looking to flip a house. Do not neglect to obtain the necessary permission in the name of saving money and time.