End users purchasing homes tend to come out in full force in the Spring and Summer months, but right now? Tis the season for investment shoppers. I’ve been fielding requests and questions over the last few weeks from new and seasoned investors planning their strategies for getting the best out of their real estate investment choices, so I thought it might be a good time to share some of my own “uh-oh” investment mistakes.
My first and perhaps most obvious mistake was assuming that trends from yesterday (last month, last quarter, last year) would continue moving forward. My first investment was actually in the subsequent phase of a development project that a close friend had made a lot of money in prior. Luckily for me, even though I didn’t bring in the profit that she did, my margins were still enough to not turn this rookie mistake into a complete loss, but my thought process behind it definitely set the stage for a potential investment disaster. I’ve since shied away from buying real estate counting on short-term appreciation and am always prepared to hold onto investments for as long as five years just in case, although I usually end up flipping it within the year. Even if I have to hold onto a property for longer than anticipated, real estate markets virtually always bounce back in the long run, so as long as I’m not sweating in the short term, I’m okay.
I’m a little undecided about this next rookie mistake. My impulsive nature works in my favour most of the time. I jump head first into opportunities and take full advantage of benefits gained while most are still running the numbers by their accountants, financial advisers, mother-in-laws and that lady at work who bought a house that one time. But I’d like to think that my decisions to dive right in aren’t as blind as they were when I first started with this.
Real estate risk is directly proportional to knowledge. There’s a pretty big learning curve, but learning is still key. Blindly making such large transactions based on incorrect advice from well-meaning observers with a complete lack of education is so, so dangerous. Nowadays, I take advantage of seminars or training programs that come across my desk and that teach me how to best make my money work for me. I’m always learning, I’ll never stop, and I know it has made a difference not only in my approach towards my craft, but also in the numbers in my portfolio.
One mistake, however, that I’m glad I never made was looking at real estate investments as anything other than a business. I find that a lot of people get lured into the world of real estate investing because of the idea of making a lot of cash fast. It really isn’t the case though. Most of the return I’ve seen on my investments took about five years to really come to fruition, and in that time, I’ve seen a lot of enthusiastic first time investors taper off into zero activity due to lack of action and unrealistic expectations. When dealing with this much money, it only makes sense to treat it with the seriousness of a career. Work hard. And get the training and information you need to develop a long term plan that makes sense for the goals you’ve set up for yourself and your family.