The Most Important Things to Know Starting Out

There are lots of things you need to know and millions of things that will be beneficial to know in real estate investing. It's a pretty broad field but I will try to give a few basics.

What do I need to know starting out?

1) It can be simple but it is not easy
Great deals are found every day - but they are hard to find.
It takes hard work and most deals don't pan out.  The fact is most new investors give up before they ever get a deal. Tip - most great deals aren't "Found" they are "Negotiated."  They didn't necessarily start as good deals.

2) You have to know what makes a good deal

Most new investors have no idea how cheaply properties can be purchased, or how cheaply they need to be bought to make money. Which leads to number three.

3) The most important thing is you have to know; "What it is worth?"
If you are wholesaling you need to know what it is worth to your customer.  That value can be different for a homeowner, rehabber or landlord.  The two most important skills are; evaluating the as is value, and being able to negotiate that price or lower.

What are the most common mistakes made when starting out?

1) Thinking this can be done without money
It doesn't take a lot of money and it doesn't have to be all your money.  However don't kid yourself, it does take some money.

2) Not knowing how good a deal has to be
A real estate agent will tell you buying a $120K house for $100K is a good deal.  But most experienced real estate investors wouldn't touch such a deal.  Usually if new investors overpay it's because they don't understand number three below.

3) Not understanding the hidden costs.
There are a lot of costs in every deal that are easy to forget about.  Closing costs, financing costs, agent commissions, vacancy rate, management fees, are just s few of examples of costs that get overlooked.

My goal in writing the above is not to discourage you, but to give you realistic expectations and be better prepared to do this business. That is what will lead to success. 

Good luck - Ned