Real estate investment is thinning out like an epidemic. More and more “newbie" investors are jumping on the bandwagon trying to make a profit after losing big in the stock market. These newbies are totally strangers to the real estate world and they don’t know the ABC of this business. Many of them are making huge mistakes. William Bronchick, a nationally- known attorney, entrepreneur and speaker has outlined some common mistakes made by newbies.
According to William Bronchick, first mistake generally made by newcomers is stock market mentality. Normally, people are interested in real estate because they had seen someone else making money from the rapid appreciation of the market over the last few years. You can buy property and flip it in years but if you buy a rental property for full-market price with break-even or negative cash flow, it is better to have a backup plan because it is not known whether the market would keep going up or not.
Second mistake is investing blindly. William Bronchick suggests it is better to investigate about a deal before investing into it. Money for deals is easy to find if you can find good deals. But, you won't know what a good deal is without having first invested in your education! The more knowledge of investing techniques, financing, acquisition, negotiating and, of course, your local marketplace, the less risky your investments will be. You can learn about all this and much more in William Bronchick’s coaching classes.
Third mistake is no cash reserves. William opines that to be in business the most important thing is not cash flow, it is cash reserves. Lack of cash reserves puts unnecessary pressure on you to do substandard repairs, accept less than qualified tenants, and give into tenants' demands for fear of vacancy. When you have a sufficient cash reserve, you act rationally.
Fourth mistake is being greedy. It’s not right to become greedy in business. If there is a potential for a $20,000 profit in a rehab project, you can't expect to make $10,000 flipping that property to a rehabber. A rehabber wants a large enough profit to justify the risk that he is taking by buying the property.
The last mistake is treating real estate as anything other than a business. Many people just want to get into real estate business to make huge money overnight, but this is not the reality of the business. More than 90% of the people who take a real estate seminar quit after three months. It takes months, even years for a business to cultivate customers and have a life of its own. You need to treat real estate like any other business, exclaims William Bronchick in his coaching classes.
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