Real estate investors tend to make similar common mistakes when beginning their journey to live life on their terms. To help investors like yourself, here are common mistakes to avoid!

Common Mistakes Real Estate Investing #1: Not Scheduling Efficiently


 

This is one of the most common mistakes in real estate investing. Are you sure that the project will be done by then? What’s your backup plan if it’s not? It’s important to schedule your time as well as your money effectively. For example, if you planned on flipping a house and quickly putting it back on the market, are you sure it will be sold in the given time frame that you had originally thought?

 

Because if it doesn’t, you will have to cover the monthly fees associated with that property. So, the saying “time is money” is especially true when it comes to real estate. This common mistake of not scheduling time properly has a habit of costing investors thousands. Learn from their mistakes, you always want accurate timelines for moving that are suitable for you and the market!

Common Mistake #2: Not Doing The Proper Market Research Beforehand

You can’t become a brain surgeon without years of education, but with real estate, there are so many real estate investors who dive into this industry without knowing the basics of the obstacles that can come up. Because the investor will be dealing with their own money, it's especially important for them to take responsibility for their own finances to make sure they do well.

 

Investors need to research into expenses, timelines, market trends, as learning should be a full time gig itself. You can never learn too much about real estate! Investors need to make sure they give themselves enough time to build confidence in the knowledge they gain, so that they don’t freeze in difficult situations that arise in real estate investing.

Common Mistakes Real Estate Investing #3: Not Pre-screening Tenants Effectively

New investors especially don’t realize how important it is to screen prospective new tenants. This is the person that you will be relying on for consistent monthly payments, in addition to also trusting them with your property. You wouldn’t trust a stranger in your home so why would you trust a stranger in your investment property?

 

It’s important to check their credit history (preferably through Equifax), get their employment letters, their last two paystubs, their referrals from past landlords (not as important but by asking it shows the prospective tenants you’re really screening them) and have the tenant supply two personal references.  You should have the prospective tenant complete a rental application and again, not as necessary, but maybe set up at least one in-person meeting with them.

 

It's also recommended to do a detailed pre-screening phase so that you don’t have to waste a lot of time showing the property to every tenant. This way you can find the ones that are the most interested and dedicated. Which is a great quality to have in a tenant!

 

The Pre-screening process is where having a good real estate agent, like the one’s on The Brian Kondo Real Estate Team, can really help!

Here are some basic questions that are great to ask in the pre-screening phase, so that you as an investor can get a better sense of who the prospect is:

• Are you currently renting? Where? How long have you been renting that property?

• Why are you planning on moving?

• What date do you want to move in by?

• What is your occupation?

• What does your current monthly income look like, is this a stable amount every month?

• How many parking spaces would you need?

• Would your current landlord be comfortable giving you a reference?

• Do you smoke?

• Do you have pets?

• How many people will be moving in with you?

• Have you recently filed for bankruptcy?

• Is there anything you wanted to let me know before I run a background check?

• Do you have any questions for me regarding my selection criteria or the property
  
  
   

It’s a great idea to get to know the prospective tenant.  However, many investors, especially new ones take it a step too far and ask questions that can be considered discriminatory, such as asking about their race, sexuality, what country they were born in, religion, etc. Ignorance is not considered an excuse for laws for screening tenants, so it is important to learn what to say, and what not to say beforehand.

 

Again, this is very important – you don’t want to be contravening the Canada Human Rights Code (Act).  The agents on my team know what to ask and just as importantly, what not to ask you so you don’t get into any trouble.



 

Common Mistake #4: Not Having A Back-Up Plan


 

Things happen unexpectedly all the time in real estate. It is important to take into account all of the possible outcomes of each state of real estate investing. When an investor is new to the business, it's obviously hard to account for all of the outcomes beforehand and they are bound to run into these common mistakes in real estate investing. This is why it is important to learn as much as possible before making the leap.

 

Learn from other investors' horror stories and learn ways to avoid the mistakes that others have made. This will help you, as an investor, know what to do in situations that aren’t working in your favour. These are bound to happen, but it’s a fantastic plan to have a backup plan so you can get right up when you make your first, second, or even third fall.

 

Remember, failure is not permanent. There are always going to be hardships, with whatever venture you set yourself towards. The important thing is being able to get back up and believe in your own ability. This is why a backup plan is a great idea. It helps provide a sense of security, so nothing is much of a surprise.


 

Common Mistakes Real Estate Investing #5: Not Having A Great Team Behind You

Getting involved in real estate investment is hard enough, but it can seem unbearable if you don’t have a good team to back you up. Real estate agents, contractors, property managers, mortgage brokers, there are so many people you have to interact with and it's impossible to learn if everyone has the best intentions. Sure, there is the backup research you can do. But when you have so many other things to do, finding people that you can trust is a frustrating and time-consuming ordeal.

 

This is a massive mistake many real estate investors make. We’ve all heard horror stories of contractors abandoning jobs halfway through or major conflict over financial compensation for projects. This is the biggest factor that causes investors to lose hope.

Real Estate Investing is a real business, and you must treat it as such.  From finding the right mortgage broker/lender, to making sure you have a good home inspector, lawyer, contractor or property manager, to finally, working with a real estate agent who knows the ins and outs of investing in real estate, it’s important to treat it like a business.

 
 

If you are thinking about becoming a real estate investor yourself, or you are already an investor and would like to leverage your current investments into more properties, or you are looking to sell one or more of your investment properties, give me a call at 905-683-7800.  You can also email me at brian@briankondo.com.
 



I’ll be your personal guide and walk you through every step of the investment property buying, maintaining and/or selling process.  

My team and I are here to help you with all your real estate investment needs.  Again, you can reach me by calling 905-683-7800, or emailing me at brian@briankondo.com.

Thanks For Reading Today’s BLOG!

If you would like to see any of my previous blog posts, please click here.

Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com

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