The 5 Biggest Real Estate Investment Mistakes People Will Make in 2020

Written by Posted On Tuesday, 14 April 2020 09:21
Every real estate show on TV makes real estate investing seem easy. No matter what property these
reality show real estate investors buy, they end up making money. It’s as easy as purchasing the
property, making a few renovations, and then selling the property as soon as it’s listed.
For those who understand how real estate investing really works, these shows, unfortunately, do not tell
the whole story. Rarely does a deal come together perfectly because real estate and the rehab that goes
with it is not as predictable as a TV show.
So, if you want to invest in real estate in 2020, here are five mistakes you might not hear about on TV,
but you would be wise to avoid.

Mistake #1: Taking Advice from the Wrong People
When you begin investing in real estate, everyone will have an opinion. Family and friends are likely to
give you a ton of advice – even if they are not investors. They will have seen a show or read an article,
and although they mean well, the advice they give may be outdated, wrong for your particular situation,
or simply misguided.
There will also be ‘gurus’ out there that have the perfect system for real estate investing. However, if
these ‘gurus’ aren’t actively investing, their strategies are more than likely obsolete or at least out of
touch with the current market. Remember, there’s never a bad time to invest, but it’s important to use
the right strategies for the current stage of the market.
The best place to get advice is through those who are actively investing. You can find active investors
through investing groups, or you may want to seek out a mentor. Following the right advice will be key
to making the right investment choices.

Mistake #2: Not Adapting
If you hear yourself, or those who are advising you, say, “I’ve always done it this way,” then it may be
time to step back and reevaluate. Why? Because real estate investing is not static. There is no ‘normal.’
Instead, there are simply different market conditions that need different strategies.
For instance, during an upswing in the market, it is easy to get funding from a wide variety of sources.
However, when the market is down, many of the easy funding sources dry up and go away. But this
doesn’t mean that you can’t still find funding. It just means that you need to get a bit more creative and
adapt to the current situation.
Don’t stop moving forward simply because things change.

Mistake #3: Using the Same Strategies
This is similar to mistake #2 but focuses more on the types of strategies used to purchase real estate.
Although everyone thinks of flipping or holding as a landlord, there are many different strategies out
there for investing in real estate, and some work better at different points in the market than others.
Some strategies include:
 Fix and flip
 Wholesaling
 Live-in then rent or flip
 Buy-hold short term or long term
 Hard money lending
 Syndication
 Buying Notes

Mistake #4: Putting Money at Risk
Not every deal is a good deal. Not every property works for every real estate strategy. Not every sale
needs to move forward. However, some investors get so set on a deal that they won’t walk away, even
when all indicators say they should. Others want to walk away, but find that they haven’t given
themselves a legal way to do so.
No matter what the market is like, an investor should always do their due diligence. Additionally,
investors need to create contracts that allow them to step away from the deal if the numbers just don’t
make sense or a report comes back with needed renovations that are far beyond your calculations.
And, just as importantly, you need to consider many exit strategies for the property. For instance, if you
plan to fix and flip, can you still make money if you hold short term and then flip instead? Or perhaps
you can turn it into a long term hold? Knowing what you will do is your “Plan A” doesn’t work out will
help the deal be less risky.

Mistake #5: Waiting to Invest
You may wonder if now is the best time to invest. You may think that you should ‘wait and see’ what
happens before getting started. However, by staying on the sidelines, you will miss opportunities to
begin growing your wealth.
Real estate investing is not a ‘get rich quick’ scheme. It takes time and effort. Each day, week, month,
and year that you wait is time that your money isn’t growing. There are no bad times to invest in real
estate as long as you do so wisely.
List of 2020 To-Do’s

To sum up, here are the things you should do in 2020:
 Get Educated – Seek out real estate investing information. Learn about the different strategies
and which work best for the current market.
 Learn from Active Investors – Find those who are actively investing now, and just as importantly,
those who have made money in a market similar to the current market.
 Create Room to Step Away – Create deals that include ample time for due diligence and closings
so that you can step away if the property’s numbers no longer make sense.
 Have Multiple Exits – Never purchase a property without knowing at least two ways that you
can exit the property. This will help lower the risk.
To learn more about investment mistakes, but more importantly, to learn what you can do to avoid
them, contact Real Estate Knowledge Institute (REKI). At REKI, every trainer, mentor, and team member
are investors in today’s current market conditions. It is our philosophy that to teach this industry you
must first be actively working in this industry. We look forward to hearing from you.
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John Trautman

John Trautman has spent his entire adult life in real estate. Purchasing his first property at 23, he learned the process of flipping and real estate holding from the ground up. Real estate continue to be his passion while he spent eight years as an account executive and later a vice President for Washington Mutual in the mortgage division. Holding the position of President’s Council and several years of President’s Club, he learned the lending business from the mortgage office perspective and lender perspective. Throughout his life he has also been a small business owner, commercial real estate holder, property designer, and house flipper.

During the downturn, John followed the deal to Detroit, Michigan, where he invested in single family rentals and multi-family dwellings. Once his returns were realized, he moved quickly to Arizona to invest in another distressed market.

His passion for making a deal and real estate has lead him to create a hands-on real estate investment mentoring club called Real Estate Knowledge Institute

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