Investing in Real Estate

It's no secret that there is money to be made from investing in Real Estate. News shows, infomercials, and magazine articles all tell stories of buying a property, putting in a few dollars in repairs, and re-selling the property for thousands more than you paid for it. What these shows and articles don't tell you, however, that there is a lot more to investing in real estate than that. The pitfalls from real estate investing come a dime a dozen, and the most common mistakes that first time (and sometimes experienced) investors make are:

• Buying at the wrong price or in the wrong location.
  Many buyers start the whole process off on a bad foot by purchasing a home at a price that is too high to make a real profit, or by purchasing a home in a neighborhood that homes don't sell quickly. You can avoid making this costly mistake by looking at comparable sales (including how many days the properties were on the market) of other homes in the same neighborhood as the one you are considering. The best way to get this information? A Comparative Market Analysis prepared by a Licensed REALTOR® - a FREE service provided by Mynette Snelling.
  

• Buying before doing your homework.
  "Buyer Beware" is an all-too-common word, especially if purchasing a foreclosure property for investment purposes. If you are getting a property that is priced under the market value enough for you to make a profit when you resell it, it is almost guaranteed that the property has problems and will need a host of repairs. It is important that you get a home inspection of the property by a licensed home inspector, because the untrained eye of the average homebuyer won't be able to see everything that is wrong with the property.
  
  After you have your list of necessary repairs provided by a licensed home inspector, it is even more important that you get estimates of the costs and time involved in completing them.
  

• Overpricing the finished product.
  It is important to understand that buyers who are looking at your property aren't going to care how much you "put in it". They are only going to buy a property that is priced competitively with other similar properties in the area from the seller who offers the most amenities. Ask your REALTOR® to prepare a Comparative Market Analysis of other similar homes that are currently on the market, and, if possible, to show you a few of those properties. This will give you a better idea of where you should price your property, and even some ideas on what repairs are more important than others.