Investing in real estate can be a great way to earn some residual income. Because housing values almost always rise over time, this is an area of the economy where you are almost guaranteed to make money. Over the last two years, housing prices have risen every single month. It’s one of the soundest investments that a person can make. But investing in real estate is not as easy as many people might believe it to be. In fact, depending on when you do it and how you do it, it could actually be a very bad investment. Here are four mistakes that some real estate investors make:
- They think that houses will always rise in value. There are situations in which a home, when you try to sell it, might actually be worth less than it was when you bought it. As with all real estate, it has to be kept up and maintained in order to increase in value. Plus, some properties will just never pull their weight and never actually make you the money you hoped they would make.
- They think real estate does not require work. You cannot just buy a property and then watch the income roll in. Real estate requires as much hands-on work as any other investment, often more, especially if you have to fix up a place before it can be sold or before it can be rented. If you are using a property as a rental property, there will likely be work keeping that property maintained for the renters.
- They do not research the area properly. Before making a purchase, it is very important to research the area and to look at value projections. Whether or not you are going to make money off of a purchase is determined by whether or not you buy a property at the right price. Not researching the properties themselves is another common issue that could lead to serious issues.
- They don’t have any cushion. Real estate investing requires that you have a little bit of money to fall back on, just in case you need to make repairs or do some other kind of work before your new renter arrives. Don’t be scrambling for money just so you can get the property ready to make money for you.