Embarking on a new venture is always fraught with some level of struggle. Whether it’s late nights up worrying about the right next steps, whether or not your choices were the right ones, or wrestling with your own limitations and inexperience, it’s just a tough time.
This is certainly true as it relates to new real estate investors.
The struggle doesn’t last forever and it certainly doesn’t have to be as big as everyone else’s. You can avoid a lot of the pains new real estate investors face by leaning on the experience and expertise of the industry professionals who have been at it for a long time—just like Memphis Invest!
With fifteen years in the real estate business under our belts and decades of combined experience in our offices, we not only know how to avoid some of the big mistakes that make new real estate investors struggle, but we know how to reverse-engineer these pitfalls and take investors from the struggle to success.
Solving 3 Common Stumbling Blocks for New Real Estate Investors
Trying too hard to predict the market.
This is a mistake that often stops would-be investors from jumping into the investment game in the first place. By looking for ideal real estate market conditions, investors run the risk of relying too heavily on the market to make their decisions for them.
This can lead to several problems. One, they use the market as an excuse not to act when they should. Fear gets in the way of taking opportunities—we wrap it up in the logic of the market not being quite right, or that it needs to do x, y, or z first, and then we’ll start investing.
The truth is, the market will never be totally ideal and it is always changing. What real estate investors should be looking for is a market that has a history or stability and consistency and not a market that has a harsh pendulum swing in either direction. This prevents you from having to watch the market so intently or stress out about every minute change.
Trying too hard to predict the market or find the next big thing and hinging your investment success on these predictions will inevitably lead to failure. Instead, focus the bulk of your investing into something reliable.
Caring too much about the physical property you’re buying.
There’s one thing that passive real estate investors should learn quickly: the actual physical property that you’re buying is largely a secondary detail! What it looks like doesn’t really matter all that much. What matters are things like its actual condition as it relates to its maintenance, value, and longevity as an asset, the location of the property, and the size and suitability as a rental property in your market. For the most part, these are details that your turnkey company will have already evaluated for you.
What you need to worry about is whether or not it is a good asset for your portfolio. Period.
That doesn’t mean neglect due diligence but what it does mean is spending time focusing on things that actually matter to you for the type of investor that you are and for the role that you are actually in.
Don’t get attached to properties. Get attached to your potential for success and the pursuit of excellence.
One of the biggest challenges for new real estate investors is thinking of their investments purely in terms of the money they can make from them. Wait for just a second, you may be thinking...isn’t that what this whole thing is about?
Yes and no. Passive real estate investment is about generating cash flow and securing your best financial future. The problem comes when real estate investors start putting the cart before the horse. They get wrapped up in maximizing their profits at the cost of things that are of utmost importance to their success!
Cutting quality in their services, for example, is not the way to succeed in this business. You can’t expect to have long-term success by picking a less-than-stellar property manager just because they charge less.
There’s a temptation to cut corners in order to maximize profits. This is basic math and it makes sense. However, in real estate investment, you have to answer some bigger questions that will secure your success in the long-term, not just month-to-month. What’s going to keep my great residents here for years? What will push them to renew their lease? What will maximize the quality and longevity of my assets? What will push my net worth to the next level?
You do these things by investing in quality, not just in cash flow. While cash flow is hugely important, it’s not the only focal point in real estate investment!
You can avoid so many of these real estate investment mistakes simply by partnering with people who have experience.
Let Memphis Invest start your investing career on the right foot.