by Bill Bronchick
Knowing your market is as important as any other factor in real estate investing. This means having a neighborhood by neighborhood analysis of the supply curve and average days on market. Both of these data formulas can be found through the assistance of a real estate broker using the MLS.
2. Mistaken Value
Most new investors use Zillow, e-appraisal, or Trulia (or even worse, an average of the three) for determining the value of a property. This is fatal “ learn to do a “comparable sales” analysis.
Get your own data, too. Relying on the listing broker to give you comps for properties is like asking the barber, “Hows the haircut?” Learn to find your own comps using public data websites like Trulia.com.
3. Underestimating Repairs
If you have no experience in rehabbing homes, then you shouldn’t be estimating repairs yourself. Get at least 3 difference contractors to give you bids. Get these bids in writing, with detailed breakdowns of labor and materials.
4. Poor Choice of Contractor
A bad contract won’t have a license, will bill you by the hour, and/or won’t work by a written contract drawn by you. A good contractor agreement is essential, have a local attorney draw one up for you. Make sure you get signed lien releases every time you write a check.
5. Bad Contract
Most real estate courses have crappy contracts because they are not written by attorneys. My advice is to learn your local Realtor form and draw up a few addenda. An attorney can help you with this.
6. Wrong Legal Entity
Most investors form an LLC for their investing practices. Is this right? Maybe, maybe not. There any many tax issues involved in choosing an entity that should be review with a tax professional, NOT just an attorney (unless the attorney in question has tax knowledge, like me!).
7. No Marketing Plan
Most investors hire a real estate agent to find them deals and that’s it. There’s not enough good deals on the MLS to make a living on so you need a better plan to market to FSBOs, foreclosures, estates, divorces, and other sources of motivated sellers.
8. No Script
OK, so got a motivated seller on the phone and now what? Uh, uh, uh “ what questions do you ask? Have a written script you keep by the phone so you always know what to say.
9. No Business Plan
If you fail to plan, you plan to fail. You’ve heard that before, but how many investors actually write a business plan? The truth is very few. Take some time to write a good, detailed business plan that you can follow as your goal.
That’s 9, but I can think of at least 100 more. Don’t make mistakes, get a mentor on your team to guide you through the process.
William Bronchick, CEO of Legalwiz Publications, is a Nationally-known attorney, author, entrepreneur and speaker. Mr. Bronchick has been practicing law and real estate since 1990, having been involved in over 600 transactions. He has appeared as a guest on numerous radio and television talk shows including CNBC Power Lunch. He has been featured in Who’s Who in American Business, Money Magazine, the Los Angeles Times and the Denver Business Journal. William Bronchick has served as President of the Colorado Association of Real Estate Investors since 1996.
This post provided by REIClub.com for creative real estate investors. Copyright 2002-2011 All Rights Reserved. Published with Permission of Author. No part of this publication may be copied or reprinted without the express written permission of the Author and/or REIClub.com.
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