3 Pitfalls to Avoid When Playing in the Real Estate Game

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So you’ve seen your umpteenth infomercial with the guy in his neatly pressed button-upped white T-Shirt grinning ear to ear waving his rock-solid no-money-down rags-to-riches real estate investment course for 3 easy payments of a gazillion dollars (but only if you call now) and now you are thinking, “wow this looks like a great deal, I better get it fast before the special offer expires.” You notice how there’s always a special offer? Anyway, I am not saying this guy isn’t telling the truth, however regardless of which course or school of thought you buy into there are several key areas that one must avoid when engaging in any real estate related transaction.

Pitfall Number 1: Don’t Overpay!

The whole point in investing is to find properties that are undervalued. How does one find out what is undervalued versus overvalued? Without getting into technical details, the bottom line is you need experience. Yes much like shopping for anything else, real estate is essentially one of the highest ticket items in the shopping center of life. It’s advisable to stick with one market, perhaps the one closest to you in proximity as a starting off point. Through your experience and asking the right questions, you will eventually have a feel for the pulse of the market you are looking after, and of course identify what is considered a good buy.

Pitfall Number 2: Know the Market

Yes, you are actually going to have to do more work! This part is really common sense though, but executing it where the beauty and the payoff comes in. How do you make money in real estate? The most basic way is to buy low and sell high. So from the first step, you have identified general trends in the value of homes, and are pretty good at spotting undervalued homes. Assuming you acquire that home, you may want to profit from it by selling it off to someone else for a higher price. How can you do this? Well there are many ways. For one, most markets appreciate in value over time so if you want a longer term approach that will work. Making upgrades to the property will automatically raise the price of the home as well. Think in terms of what the market wants, not what you personally want. You aren’t the one buying it; you are trying to sell it to someone else for a higher price than you bought it.

Pitfall Number 3: Know Your Budget

It may be a fine philosophy to go through life on a whim, but real estate is serious business, and thus diligent financial planning and budgeting is critical to your success. Don’t worry you don’t need to be a finance geek, however you need to be disciplined and know your budget from the onset, or you may be finding you are learning that you need to make certain renovations or upgrades, and didn’t anticipate it going over to a certain cost. Think ahead as to what is needed before actually going forth with investing in real estate.

About the Author

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The Single Biggest Mistake Real Estate Investors Make

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Before you even think about becoming the next real estate tycoon, you’ve got to be disciplined to learn the basics. What you’re about to read may come as a surprise to you, but there is a single mistake among real estate investors, especially new investors that literally can cost you thousands of dollars and could even potentially put you out of business for good. Now, I am certainly not trying to scare you, I simply want to make you aware of the number one potential pitfall to investing in real estate because it is totally avoidable. And contrary to popular opinion, this isn’t something you can pick up from watching late night television or at a weekend seminar. The one common mistake that I’ve seen that puts investors out of business revolves totally around doing their due diligence or lack of due diligence.

As your just starting out and sometimes even after you’ve completed several deals, your adrenaline is pumping every time you look at a deal. You’re hungry, maybe even a little desperate to get a deal done. Your hearts pumping from the excitement to make that offer, and all you can think about is buying this property. And as a result of your eagerness, you tend to slip up and make mistakes. The one critical mistake that will cost you your business comes from simply over valuing a property. You analyze the deal’s numbers, slightly exaggerating the property’s “as is” value and it’s true potential. In other words, you appraise the property value for more than what you’ll ever be able to sell it for. Now, there’s some good news to all this: I can show you exactly how to keep from making this one critical mistake. This is not information that is optional; it’s vital to your business that you get this right.

So, here are three bulletproof ways to evaluating properties to keep your property values in line:

1. The tax accessed value. For every piece of real estate, there is a tax parcel id that reveals the tax value of the property. The owners pay tax every year based on the current value of the property shown at the tax assessor’s office. This information is freely available to the public in every market. In some areas, tax assessors only access property every three or four years, therefore these values can be drastically off from fair market value. You’ll need to find out when the latest assessment was performed in your area. You can go to http://www.netronline.com for a list of all the county recorder’s offices and tax assessors.

2. Comparable Sales. This is exactly what licensed appraisers use when evaluating a property’s value. They will look at the property; it’s current features, and the condition. Next, they will go to the MLS (this is the listing service most commonly used by real estate professionals) to pull all real estate sales surrounding the home within the last three to six months usually within a half a mile of the subject property. You can perform the same exact exercise with the help of a realtor. Simply call a realtor and ask them for the listings and homes sold for that compare to the house that you are looking at. Now, you want to get a list of the homes sold and the ones that are on the market. After all, you’ll want to know who your competition is when you start marketing the property for sale. You’ll want to compare the square footage, the age, the roof’s age, and all the features that are available. How does your property stand up to the market? Does it have more or less to offer for the money? Also, pay attention to how long the properties are sitting on the market before they sell.

3. Drive By. That’s right, get off your butt, get out there and drive to learn your current market. The fact is that there is no better way to learn your current market conditions than getting out to look at what the market has to offer. Currently, there are tons of websites that you can subscribe to that will give you comparables, however, knowing your market from simply going neighborhood to neighborhood is priceless. Buy yourself a cheap map with a yellow highlighter. Now, start in one area of your market driving the neighborhoods and you’ll work your way until you’ve looked at every neighborhood in your market, highlighting the areas you want to work. When you are driving these neighborhoods, you’ll want to record every house for sale and collect every flyer that is advertising a home for sale. Next, make some observations about each house. Look at the structure, at the rooflines, whether the houses are in good shape. On every property, guess the age, the square footage, and the price, recording all of this information. Then compare your answers with the information you collect from the real estate agents, the seller themselves, or the flyers that you collect. This method alone will get you totally familiar with your market in a very short time frame.

You must understand how significant this one step is in evaluating your deals; otherwise misjudging one property value can take you out of business for good sending you back working for that dumb-dumb of a boss of what some call a job. Your goal is to learn everything about your market so that when you get a lead, you’ll have a good estimate of what the house values in the area are before you ever leave the house. Start today using these three methods to evaluate your market and you’ll build your business on a solid foundation avoiding the common mistake of over valuing properties that many investors make.

About the Author

Derek Pierce, full time Real Estate Investor, shows you the exact strategies to his success in his Free Book: “How I Went From Corporate Guinea Pig To Real Estate Success”. Get your copy and Creative Real Estate Investing Tips by going to http://www.thereisecrets.com

Fund Managers Eyeing Modest Real Estate Gains – Investors Business Daily

Fund Managers Eyeing Modest Real Estate Gains – Investors Business Daily
Mutual funds specializing in real estate outgained the S&P 500 index by 7 percentage points last year. This year, gains look tougher to get. After collapsing 46.63% in 2008, the average real estate fund returned 30.34% last year vs. 23.45% for the S

Cathay General Bancorp Reports Fourth Quarter Results; Nonaccrual – MSN Money
In 2009, the Company raised $120.5 million in additional capital through the sale of 13.9 million shares of common stock. Total deposits increased by $668.3 million, or 9.8%, to $7.5 billion at December 31, 2009, from $6.8 billion at December 31

Real Estate Agents – Fort Lauderdale Sun-Sentinel
Real estate agents, also known as sales agents and brokers, facilitate or negotiate the sale or purchase of any property, most frequently a home. An agent is usually the person managing a specific deal; a broker is usually the person running a firm