Five Preventable Blunders Often Made by Newbie Real Estate Investors

Why are some newbie investor's first transaction their one and only transaction? (We call them 'One and Dones') Is it luck, fate, or some predetermined force of nature that allows some investors success and others failure? The good news is that being a good investor is not in the genes. It's simply a discipline, and, like any other discipline, it can be learned. Everyone, regardless of your current financial situation, history, or background, has the opportunity to be successful in real estate. The goal of this short article is to help newbie investors with achieving their goals by pointing out some of the following, common blunders first time investors make:

Failure to invest in education - Let me start with a small, personal example. I recently bought and sold an investment property in Austin, TX, that involved multiple additional strategies in order to make it profitable. I was the 8th investor to see this deal. The previous investors didn't see anyway this short sale transaction would be profitable. Well, they were off by about $290,000. That's right, by combining a handful of different buying and selling strategies, I was able to solve the challenges that other investors were not, and was able to make in one transaction the amount that the average American family would make in 9 years! This is the power of knowledge in real estate. As in any business where you are touching tens of hundreds of thousands of dollars, shouldn’t you know and understand as many options as possible when it comes to purchasing or selling properties? Making money in real estate is as I stated above; 'it’s simply a discipline...it can be learned'. One final note on the importance of learning multiple strategies: Many ‘former’ investors are such because they fell in love with one or two strategies only, and when the market changed, they were unable to adapt due to their lack of knowledge. When I started in 2003, I focused on fix and flips. Many other flippers didn't see the trend changing to short sales, and since they didn't make the change, they went out of business. Understanding these different types of strategies allow investors to adapt to the market as well as profit from deals other investors.


Failure to treat their real estate investing business as a business – When people have jobs, they spend 8 hours a day working at it. Once they become business owners and have freedom, many unsuccessful investors don’t work very hard at it. It’s amazing how folks will trade time for dollars to make someone else rich but don’t put forth the effort to make themselves money. Too many people watch TV shows on how to get rich quick in real estate and seem to think that it doesn’t require much time, effort or knowledge. Dealing with the high dollar amounts that profitable real estate investors do requires a high degree of education, planning, and systemized processes. If you are seeking to create wealth through real estate investing, then spend more time and effort taking this opportunity seriously. This means developing a business and marketing plan, creating an entity, building a team of professionals, establishing business credit, attending educational events, and dedicating non-negotiable time on a daily or weekly basis in which you will construct this business. Finally, people can do hobbies by themselves. Successful investors surround themselves with others who share the same passion, and find a mentor who is willing to share their experiences. Get active in your community and let people know what you're doing, which leads us to the next tip...


Failure to Advertise New Business - In my experience, I’ve found that many newbie investors are ashamed to talk about their business until they have done at least one successful transaction. Procrastinating on your storytelling will cause you to miss referrals from your friends and family that could lead to profitable deals. Let everyone you talk to know that you’re a real estate investor. The great advantage to this business is networking, because everyone knows someone who is behind on payments, having a hard time selling their house, or looking to purchase but cannot obtain conventional financing. Profit driven real estate investors understand the importance of leveraging other peoples’ relationships, contacts, and resources. These things will build your business tenfold, so don’t be shy about what you're doing! GET THE WORD OUT!


Failure to take advantage of the Internet – Does internet marketing work? You're reading this article online, aren't you? More home sellers and homebuyers are using the internet than any time before, and this trend will continue. They use the internet to not only look for options on buying or selling a property, but they use it to also research the investor to see who you are or what experience you have. One of the best ways to build credibility or legitimacy in your real estate investing business is to have a professional looking website. Getting involved with press releases, writing articles or blogs about your strategy, or shooting videos about your experiences will give you an ‘expertise’ level of knowledge in the industry. People will 'google' your name to find out more about you, and since this information influences their decision, make this information available online so you can control what people find out about you! In fact, reading this article that I’ve written about real estate investing may be the first time you’ve heard of me and may lead to a very mutually fruitful business relationship! You can create relationships like this too by writing about your experiences.


Not utilizing the services of real estate agents - A knowledgeable real estate agent can be one of your strongest allies. Agents have more knowledge about developments and trends in given areas and may already have a qualified buyer or seller who fits within your real estate strategy! Plus, they are able to provide great assistance with running comparables. But not all real estate agents have the same knowledge or experience. The key is finding an agent who understands both your end goals and your real estate investing strategy. Given all the advantages, you will definitely want to have a good Realtor on your team.
So what have we learned? There are two types of mistakes to learn from: your own mistakes or others. Look, you'll always make some mistakes, but learning from the gaffs of others will allow you to prevent certain costly missteps and allow your business to thrive quicker. Talk to others money making investors and find out not only what they did correctly, but also discover what errors they made! By treating your business like a business, planning appropriately, and leveraging the resources, skills, and relationships of others, you will put yourself in the best possible position for success.

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About Phill Grove

Phill Grove has conducted approximately $200M in real estate transactions – using non-traditional investing methods such as mortgage assignment, short sales, equity partnering, auction-options, wraps, swaps, and other methods – many of which he invented and/or pioneered for the industry. Phill has invented a new strategy called the Mortgage Assignment Profits System. Phill Grove has personally trained and coached hundreds of Real Estate Investors on the "12 Ways to Buy and Sell Real Estate", as well as marketing and lead processing strategies that actually work. Find out more about Phill at http://ping.fm/Lggox