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Common Mistakes Amateur Investors Make

Having 25+ years in this industry and worked on countless investment properties with a plethora of clients, has given me the insight to better help my clients to avoid making the following emotional and illogical mistakes when investing.

Most clients tend to be very emotional when it comes to investing in real estate. Especially when the investment property is a house. They will look at this home as if they might live in it someday. Doing this makes clients lose focus on finding an investment property that could provide profit or cash-flow or financial freedom.

For instance, a client will focus on the color of the kitchen tile, size of the yard, or how close the property is to where they currently live rather than focusing on the return on investment that property could yield for them.

Having trust issues due to a bad experience in their past is common. A client who determines their investments on fear can’t trust someone else to manage their property, therefore making them landlords instead of active investors. Decision making based on fear and mistrust limits the potential investor from leveraging other professionals time, experience, skills and knowledge. Instead, they waste years of time learning various trades like carpentry, plumbing, roofing etc. This is a very common mistake for beginner and amateur investors. They end up spending their own money doing things on their own instead of making money on the property.

Luckily with the invention of the internet, it is much easier to find reliable, trustworthy, and convenient professionals and services. Practically speaking, there’s no need to worry how far the property is from where the client currently lives or the color of the kitchen tile. A client could live in Silicon Valley California, purchase properties in other states like Texas and Florida , and be able to have their investment properties taken care of and expand their wealth without them physically being there.

What’s the sense of investing in a single family home in Northern California that costs 1.5 Million that is rented out for $4000-5000 when you can buy seven properties for the same price in Houston Texas that will produce over $10,000 a month together? The property in California is more than likely to provide negative cash flow where clients are contributing out of pocket money to pay the mortgage rather than properties in Houston or Tampa where the properties are rich in diversity, appreciation, and positive cash flow.

Beginner investors tend to make these illogical emotional decisions and others, when purchasing a product or service. Many people prefer meeting professionals in person, some others have no issue meeting them online, making a live video or a conference call. Seeing the property, investment specialist, and all the other professionals involved in acquiring and maintaining investment properties, does not guarantee a better service or outcome. Nor do recommendations of professionals in the real estate realm from friends or family, who have never invested before, mean they are good recommendations. This kind of blind trust often leads to loss of money and discourages newbies from continuing to invest due to the early bad taste. It’s best to avoid this mistake by getting recommendations from those who have invested and personally worked with professional in question.

When we take on new clients, we make sure to educate on the difference between being a landlord and being an active investor. Our clients are never left clueless or resourceless when investing in a property. Trust issues with professionals is a thing of the past since we have developed a team of reputable experts to help and guide our clients through each and every step of an investment. Save yourself some time and stress by working with us to invest in your future and expand your wealth. We strive to make investing simple, easy, and worry free. For information about what we do and how we do it, visit: Feel free to give us a call or send us an email. I’ll be happy to answer any questions or curiosities!

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