Top 6 Mistakes Real Estate Investors Make

I am often asked, “What are some mistakes that you see new investors make when starting this business?”

Here are 6 I see almost daily:

  1. Not treating it like a business
  2. Not learning the “rules of the game”
  3. Not having direction
  4. Not knowing the numbers
  5. Not planning ahead
  6. Having an ego

  1. Not Treating it Like a Business

If you were to open a brick and mortar business, you would hopefully do research, plan ahead, and start your new potential career in something you are passionate about. You should plan on putting in the time without counting the hours because this is your passion. 

I realize that we may all love real estate, but even I am not passionate about every step in real estate investing. Some things are drastically more fun while others can feel like a chore. That being said, any entrepreneur will sacrifice their time and power through the things they don’t enjoy in order to fulfill their passion and get to the end result.

“In business, it’s 24 by 7 by 365 by forever, and you’re competing with everybody. Business is the ultimate sport, there’s nothing close.” 
Mark Cuban

  1. Not Learning the “Rules of The Game”

Think of real estate as a game. How can you expect to play the game and win if you don’t know the rules of the game? Just like any board game or sport, there are rules and you MUST know them.

When I made my mistakes early on in my investing career or even if I make any mistakes today, I can ALWAYS trace it back to skipping vital steps. I have seen many investors make great money and lose great money and again it can be traced back to them skipping one or more of the key steps.

Learn the steps and have a coach or some third party person that has gone before you help lead and guide you. Navigate your business through trial and error and help you avoid any costly pitfalls.

  1. Not Having Direction

My business partner, Tony Rosenbum, and I recently taught a 30-Day Challenge and at the end of the challenge, we asked for feedback, either good or bad. One thing we heard over and over from students was they felt like they had massive direction.

We have seen countless investors who spin their wheels, just like a car stuck on a patch of ice in the winter. Despite the driver wanting to move forward and revving up the engine, it goes nowhere.

You need to have direction or you and your business will keep spinning your wheels and not see the results you want. We all know what happens if we don’t see any progress. We give up and quit. The problem was not the effort but rather not having a clear focus on what you should be focusing on at that time.

  1. Not Knowing the Numbers

You can have any calculator in the world and if you enter the wrong numbers in the calculator, it is not the calculator’s fault for giving you the wrong answer. You MUST know your After Repair Value (ARV) and you must know all the other expenses when flipping a house. 

  1. Not Planning Ahead

I especially see this when it comes to the scope of work. In your head, you may have a certain picture of how you want the house to look once it is renovated. The problem is the contractor may have a different picture. If this is the case, and the scope of work isn’t clear enough, in the end, the house is not renovated the way it needs to be to get the expected ARV.

  1. Having an Ego

There is no place for ego when it comes to investing. I have seen too many investors keep digging themselves into a deeper and deeper hole just like we see on many popular TV sitcoms where they make a mistake and instead of coming clean they keep making it worse. This may make for great TV entertainment, but it does not bode well in business.

Don’t be afraid to swallow your pride and ask for help when needed. I promise that it is always better than the alternative.

We all make mistakes. The key is to mitigate our risk as much as possible. Thankfully, real estate investing can be predictable if you have a great system filled with checks and balances AND you don’t deviate from it.

Happy investing!

Jeremy Isles

Leave a Reply