Even experienced real estate investors make mistakes sometimes. Real estate investing is such that you grow and learn something in every deal you make. Of course, as time goes by and as you take in more deals, you should be able to have learned from your past mistakes and not do it again.

As experienced as you may be, mistakes are still common. Beware though, because some mistakes can be very damaging to your portfolio and career.

5 Mistakes of Experienced Real Estate Investors

1. Failure to Check the Balance Sheet

In any type of business, the balance sheet shows just about all the operational finances that would show you how to best optimize and utilize your assets. It may not show your cash flows, but it shows the growth of your assets, equity, different expenses, and tax benefits.

Hiring an accountant or having your accounts checked is great, but you have to make sure that you yourself aren’t ignoring your balance sheet. If you cannot understand how to analyze the balance sheet, you can always ask for help from an accountant.

2. Getting Bad Deals and Working With Bad Partners

You should learn how to spot an unprofitable property when you see one. As your experience builds up, you should become increasingly aware of the type of deals that will bring a profit and those that are a loss.

This “bad deal” includes only those properties that will require huge amounts of payments that would only end up swallowing you whole. Properties that only have minor problems like rehab and staging are potentially good. You must learn how to calculate the amount of fixtures and expenses of a property before deciding whether you’ll take the deal or not.

Sometimes, the problem isn’t the property but the people. Being comfortable and trusting your partners is important in making great deals. Make sure you hire people who you can completely rely on to make a good job. Make sure that terms and conditions are entirely agreeable to the both of you, too. Work out any problems before shaking hands upon a deal.

3. Jumping Ahead Without Any Knowledge

One thing that all successful real estate investors have in common is their never ending search for more information on the real estate market. They know that knowledge is important.

It’s not just knowledge, too. Effort and perseverance is also needed. Do not just jump into a deal where you have no idea on how to fix, market, and sell. Make sure you have targeted the type of niche that you would be into, and in what area. Knowing your area well will certainly allow you to gain more opportunities and leads.

Once you’ve mastered all there is to know on one specific thing, or a niche, then you can broaden your horizons and attack another area that you can target, study, and get deals from.

4. Holding On To Properties Incurs Expenses and Don’t Give Much Profit

Sometimes a real estate investor comes into a situation wherein he or she has got more land than he or she can handle. This is basically what happens when you combine the first three mistakes above and hold on to the properties still.

Look over your list of assets, find out which ones are only incurring costs. Look for further improvements that can be made to the properties to make them profitable. Dump the properties that only gives problems and focus more on the properties that are worth your effort and money.

5. Not Using Your Knowledge On the Local Market

While the internet, magazines, and media all talk of real estate, be aware that it generally refers to the national state of the real estate market. Knowing what goes on with it is good, but you should focus more on the local market you’re in.

In reality, all real estate is local. The value of the properties is, after all, determined by the local market conditions and rates. Local markets may also have their own pace and trends. Being successful in your market means to always gather information about your market and anticipate new trends and developments.

The housing market is still slowing down. There doesn’t seem to be a stop sign to the recession ahead. But recession or not, as a real estate investor, you’re still going to have to sell that house.

In the state that the housing market is in nowadays, people would consider it lucky enough when you’ve lowered the price just to hove sold the property. And you might be thinking: Is this the only way?

The answer is no. You can always sell it. Just sell it. No need to lower the price. Just sell it.

5 Tips In Selling the Property

1. Create a Listing That Is Credible and Great!

When you’ve got an agent who wants to scan the list of properties you have at hand, engaging his or her attention will be important. Catch their interest by taking charge of your MLS listing and making it look great! Don’t just depend on the real estate brokers to create the listing for you.

Most MLS listings can be very boring to look at. To capture the attention of your clients, make your listing more lively. Print pictures that display the appealing parts of your property. Make sure the pictures are clear and well-photoshopped. Take pictures of the property in its most desirable form.

2. Directional Signs

You have to make sure that your property can easily be located by your clients. Use lots of directional signs to avoid misunderstandings on the location. This is especially helpful for properties that are far from the main roads.

3. Put up a Professional Sign In Front.

You can give out a sense of credibility and professionalism through putting up a professional sign in front of your property. As much as possible, do not use cheap signs where you have to roll up your flyer. A sign that has an attached flyer holder will instead be preferable, making it easier for people to pull out your flier when they pass by.

You can also encourage interested prospects to take a peek in the house by putting up the flyer box on the stoop of the home. All you have to do is place an arrow with a “More Information” phrase on your sign to direct them into your house.

4. Not Just an Ordinary Flyer

Many people wouldn’t pay much attention to flyers. This is because almost all flyers are basically boring. Most investors would sometimes just print flyers in black and white. With a boring flyer, how could you possibly expect someone to notice it?

For starters, a flyer will catch a person’s attention if it’s in color. Lots of clear pictures will also add to the trick. Another concern about flyers is that they mostly focus on facts. Information alone won’t get a person to be interested in your property. Focus on showing pictures of your property in the fliers. Remember, you’re selling the house.

5. Give that “Push”

Most sellers would be contented by having prospects take a look at the property and leaving them to make up their minds. This, though, will not be enough to make that sale.

Many prospective buyers are actually already ready to buy a house. They’re just not sure which house. In order for that house to be your house, you have to give the seller a little push to consider your property.

Always be ready with a contract. Try to get the buyer to leave you a deposit check, even if it is refundable. You never know he or she might really go along with buying the property. Get as much commitment as you can.

In real estate, contracts are a must. But what can sometimes be surprising is that despite the fact that it is a common requirement for deals and investments, only a little of it is understood. Nevertheless, it doesn’t matter if you’re beginner or an expert in real estate investing. You have to be equipped with contracts when working on your deals.

As real estate contracts are based on common law principles, it is naturally important that real estate investors understand the general flow of contract law: offer, counteroffer, and then acceptance. Although there are some differences in the contract law of each state, generally all contracts come down to a center point: mutual agreement between the parties.

Basically, the contract is initially drafted and serves as the “offer.” If the seller wants to add to the contract (another condition or a clause), then the seller is making his counteroffer. If the seller agrees to the terms of the contract, then there is “acceptance.” The result would be a mutual agreement between the two parties, making the contract binding.

Unilateral and Bilateral Contracts

A real estate contract can either be unilateral or bilateral depending on the kind of deal you’re making. If you are involved with a sales deal, for example, the contract would have to be bilateral. This means that it’s a two-way agreement wherein the seller agrees to sell and the buyer agrees to buy. The bilateral contract is most often used in real estate, since almost all the deals require the assent of both parties.

If you’re involved with options, however, a unilateral agreement is appropriate since in this kind of deal the seller is obligated to sell but the buyer is not obligated to buy.

Basic Requirements Of a Contract

Each state has its own standards and criteria for the real estate contracts. But all contracts more or less have most legal requirements in common.

Written and In Print: Verbal agreement is not enough when it comes to real estate deals. Real estate contracts have to be in writing for it to be enforceable.

Identification of Both Parties: The contract must clearly state the identification of both parties. It may not be really legally required, but full names and middle initials helps to avoid possible mistaken identities or misunderstandings.

The Property: The property to be sold and bought should of course be written down, along with a legal description and location.

Purchase Price: The purchase price of the property must also be written in the contract. If the purchase price has not yet been determined, you can state a reasonably ascertainable figure in the contract.

Mutual Assent: Mutual agreement is the most important criteria in a contract to be binding. This is especially important as almost all real estate contracts are bilateral and can only be enforced with both the parties’ agreement.

Signatures: For the contract to be enforceable, it has to be signed by both parties. The law requires both parties signing to be of legal sound and mind, of course. A facsimile signature is acceptable as long as it is stated in the contract that facsimile signatures are valid.

Consideration: Consideration is what induces a promise. It is something of value or interest bargained for in exchange of the property. It binds a contract and makes the contract enforceable. The amount won’t really matter, as long as there is a consideration. Money is the most common form of consideration, but another property, a promise to perform, or something else in value is acceptable.

You have your house plan, your choices of paint and tools, and a picture in your head. You have the expenses figured out.. or so you think. The financial aspect of remodeling your home may seem simple. But there are more to consider when financing a remodeling project.

First, ask yourself: Is the home improvement for your own benefit or is it to help you sell the property?

This question is important because you will be remodeling the house with either your family’s needs or the next occupant’s needs as basis. The changes of the house should naturally be for the good of whoever will use the house after the remodeling. If the purpose of remodeling your house is to make it better for you and your family to live in, then by all means remodel the home however you want. But if your goal is to make a higher sales price for the house, then don’t be too specific on the remodeling. Compare the property with those in the neighborhood first. If your home improvement plans will bring the house to the neighborhood’s level, the sales price can be increased. Being too different from the neighborhood (like having the only swimming pool or being covered with so many tall bushes), on the other hand, might only put off buyers.

In remodeling the house for the buyers, you might want to stay safe. Tastes vary for every person and the buyers may not like how you remodeled it. They might want to have their own decorations on the house when they move in. Staying simple is sometimes the better decision.

How To Pay For Your Remodeling Project

There are many options on how to pay for your remodeling project. You may be able to spend less than the normal amount, or you may be able to deduct the interest from your income taxes.

The simplest option in financing your remodeling project is to use an unsecured loan. This type of loan, however, is only best when your remodeling project costs under $10, 000. The loan costs won’t be associated with other types of loans, but the interest rate would be higher.

Opting for the home equity line of credit is also a plan. If your house is worth more than your current mortgage you can borrow against that amount. You can borrow the money in stages if you want, and no interest will be charged until you actually borrow the money. You are expected to pay the closing costs to set up the loan, though.

One disadvantage of getting a home equity line of credit is that the interest rates vary and they may go up. Another downside is that you have to be prepared to pay the entire loan immediately if the lender tells you to.

Another option is having a ’second mortgage.’ The second mortgage is similar to the home equity loan in terms of having to borrow equity in your home. But a second mortgage has a fixed interest rate and is for a fixed period of time only.

For major projects, you can try to refinance your first mortgage. Using this option, you will be facing an interest rate lower than your existing mortgage, though you’ll still have to settle the closing costs. The interest can actually be deductible so ask for assistance from your tax advisor when refinancing your first mortgage.

401k or 403b retirement plans are also alternatives in financing your remodeling project. With the 401k or 403b, you’ll be able to avoid most closing costs. But you will only have a short amount of time to pay it back, so it would be best to use this loan only on smaller projects.

One last option is to borrow borrow from your contractor. This is actually the most costly of the loan options. Interest rates of this loan can be as high as 20% or more.

For everyone of these options, you are sure to find both advantages and disadvantages, Finance isn’t such a simple thing, especially where loans are concerned. Since loans are usually needed in remodeling a home, you should try look into the costs more closely and pick the best option for your remodeling project.

You may have noticed that despite your efforts in improving your advertising campaign may not always produce good results in bringing you prospective buyers for your property. This isn’t really surprising. Advertisements — fliers, posters, etc. — do not guarantee to bring you buyers. Which is why you would have to put effort in personally engaging in many real estate transactions. One of which is research that would focus on finding signs of a motivated or prospective buyer.

This is not to say, of course, that you discard any advertising. Your advertisements and marketing strategies are still the gateways for you to find out if there are interested buyers out there for you. Efforts put in advertising and campaigns would not go to waste once the prospective buyers know of you.

The main thing to remember when you do your advertisements is to target your specific market. If it would be a waste of time and effort, and not to mention more costly, if you direct your ads to just anyone without even thinking if they are the people that you are looking for. When done properly, your ads will pay off and it is the prospective buyers themselves who will be coming to you, not you to them!

A proper strategy for advertising and marketing yourself would definitely be a factor in looking for prospective buyers. Flyers, brochures, and TV ads are still being used, but the most popular type of strategy employed by many real estate investors today is direct mailing campaigns. This type of marketing effort will allow you to directly narrow down prospective buyers and at the same time it is cost-efficient (see Direct Mailing Campaigns). Another marketing strategy of favored by many successful real estate investors is marketing themselves and their expertise online.

Putting Yourself In Your Buyer’s Shoes

One effective way to know how to meet a prospective buyer’s expectations in a property is to be one, or at least just think of yourself as one. Put yourself in the shoes of a buyer who wants a residential home. Then ask yourself what a residential home should have enough for you to want to buy it. Most usually, it would go down to three things:

• stability
• comfort
• accessible

The property has to be stable and well-repaired. No buyer would want a run-down property, or a house that looks like it can just go down the drain any minute. Check the property to make sure it meets your expectations (posing as a buyer) and make changes when needed.

Everyone also wants to own a house wherein they are comfortable. This would involve a proper staging and design from you. Keep the rehabbing simple and do not either overdo or underdo in the renovations.

Last is that the property has to be accessible for the buyer. A property in a good and clean neighborhood is a “yes.” Nobody would want a property standing solitary in a dark area.

With these three as your starting points, you will be able to find out what your property lacks and what not to put in the property. Always remember to be more customer-centered, meaning that you should put yourself in a buyer’s prospective to know what your property needs to be bought.

When selling a home after buying it, your primary focus would be how much your profit would be in the sale. So naturally you would want to raise the resale value of the house. In raising the resale value of the house, you look into the improvements you can make to make the raise possible.

You’re probably wondering what repairs and improvements to make that would surely increase the home’s resale value. The first part of the home that you should look into improving should be the kitchen! Nothing is more dramatic and noticeable to a buyer than a kitchen renovation.

Why the kitchen? The kitchen is like the social centerpoint of every family. This is where families get together and socialize with one another or with guests. It’s the one room wherein family members can completely gather around everyday!

So how do we start with the kitchen renovation? Here are some of the starting points:

Cabinets and Storage

Cabinets actually set the tone of mood of your kitchen. They determine how organized the workspace will be and will provide a clean look to the room. Closed storage is preferred; no glass doors or open shelves. Adding a little design (not too much; leave some designing for the buyers) and some fixtures can also liven things up.

Cabinets and storage are one of the biggest investment in a kitchen renovation, but they the most dividends.

Countertops

Countertops made of granite or marble are now popular because of their strength and aesthetic appearance.

Appliances

A fridge, a stove, and a dishwasher ought to do the trick! With these three already in the room, anyone can say that the kitchen is modernly redesigned already. Now if you opt for the appliances to be high-end and stainless-steel, not to mention energy-efficient, then your kitchen will definitely be seen as upgraded.

When looking for an alternative for a stainless steel finish, white remains the most popular. It exudes a clean and fresh feeling to the room. A white finish also costs less and can be as good as the stainless steel finish.

Flooring

What’s for the floor? What is popular right now is having light-tone wood and mahogany finishes, or bamboo or hardwood. These look great with white cabinets. If you’re worried about the tiles getting easily worn out and you’ve got heavy traffic in the kitchen, you can opt for oversized ceramic (or slate and limestone) floor tiles. Sheet vinyl flooring is a lower priced alternative. These two are definitely preferable to the peel-and-stick tiles.

Lighting

Last but not least is the lighting in the kitchen. You’ll need three types of lighting: ambient, task, and accent lighting. Ambient lighting is used to cast over a general illumination around the room. Task lighting is used when doing chores like cooking. Accent lighting is used to create an attractive focal point in the room.

With the housing market still a little unstable and adjusting to the current economy of the country, grounded investing principles are needed and are more important then ever. Over time, real estate investors have gone on to making their own tactics in making their investments. Some would buy properties at full retail value and make a profit by flipping the property. Others get stuck with properties they paid too much for and undervalued.

The simplest and most common advice to avoid predicaments such as these would be to go back to the basics of buying and investing right.

When someone comes to you and tells you that you should buy a particular house or property, the first thing you should ask that person is why that property would be a great investment. Even before that, you should have already formed your own perception of what a great investment is.

Many people perceive a great investment as something that would make them money in the future. There is a little problem with this perception and that is that an investment that may generate some profit has the probability that it also might not. Ideally, if you’re going to invest in something, you make sure that you will generate a profit. And to make this happens, you have to redefine your perception of a great investment.

A great investment, to many successful real estate investors, is something that will be able to generate profit at the present time that you made that investment. We all know what we are looking for in every investment, and that is profit and money. Having these two in mind, you cannot just stick to an investment that may or may not give you these.

How do you know if a deal is a great investment? The answer is simply to go back to the basics.

Going Back To the Real Estate Basics

The basics of real estate investing, like any other basic studies, is actually simple. All you need to do is follow three steps:

1. Make sure to know the value of the property. It could be the appraisal value or the after repair value or the market value. Learn the recent appraisals that the sellers can give.

2. Make an estimate of the expenditures you’re going to make for the repairs.

3. Decide on how much you’re willing to invest. Decide on how much you think a property is worth and don’t just take into account the seller’s price or the banker’s. It’s your investment, after all.

Once you’ve finished setting up your limits and considerations, it is time to ask yourself two questions:

• If I pay cash on this deal, what is the most I will pay?
• If I can buy the property by keeping the existing financing in place, what is the most I will pay?

These two questions will certainly keep you out of financial loss and enable you to make a profit. It would then be up to you how you negotiate and play the deal. Always stick to your limits and maximums.

These are the basics — simple yet effective.