By Anthony Seruga and Yolly Bishop
Are you considering getting involved in commercial real estate investing as a career? If so, then there are some things that you are going to want to learn how to avoid. You'll want to try to avoid the common mistakes and you'll also want to be sure that you know the important things to do when you are involved in commercial real estate investing. Sure, more than likely you still may make a few mistakes along the way, but the more you learn about investing, the more likely you will be to avoid all of those common mistakes.
Things to Do
When you are involved in commercial real estate investing, there are some things that you will need to remember to do all the time. The following are a few of the things you need to remember to do when you start investing in commercial real estate.
Always Investigate the Deal - Before you close a commercial real estate deal, it is important that you take the time to investigate the deal. This will mean that you have to take the time to do due diligence on any piece of property that you consider investing in. Never think that you can get by without doing your due diligence, or you may end up on the wrong end of a bad deal.
Learn From the Mistakes of Others - No doubt you want to avoid making mistakes yourself when you are involved in commercial real estate investing, so be sure that you learn from the mistakes of other people. When you see another investor do something wrong, remember it and learn from it so you avoid making the same mistake.
Learn from Bad Experiences - If you do make a mistake, which is very possible when you first get started, make sure that you learn from your bad experience so that the experience was not in vain.
Know How Long You Can Wait for a Payout - You will also need to be sure that you know how long you are going to be able to wait before you actually get a payout on the investment you make. Make sure you have a realistic estimate on how long you can really wait, or you may end up having problems.
Common Mistakes to Avoid
Of course while there are many things that you need to remember to do when you get involved in commercial real estate investing, there are also some common mistakes that you will want to learn about so you can avoid them. The following are some of the most common mistakes that commercial real estate investors make. Learn them well so you can avoid making them yourself.
Mistake #1 - Ignoring Market Conditions in Your Area - One of the biggest mistakes that can be made in commercial real estate investing in ignoring the local market conditions. Even if you invest in a great property, if you do it in a bad market, then you can really lose money. However, on the other hand, even a bad property in the right market can really make you money as well.
Mistake #2 - Not Doing Proper Due Diligence - Another common mistake that some people make when they are involved in commercial real estate investing, is not taking the time to do proper due diligence. Usually it is best to hire professionals to help you with this job, since it can end up being more expensive if you try to do it on your own and you do it the wrong way.
Mistake #3 - Borrowing Too Much - If you really want to end up in a disaster, borrowing too much money is a mistake that will definitely lead you right there. You should never borrow too much money unless you are sure you will have the capital to pay it off. Remember that when you invest, you at least need to break even, or you'll lose money. Of course the goal is to be sure that you actually make money on the investment.
Mistake #4 - Not Having Good Exit Strategies - Too many people have found out the hard way that you must have good exit strategies when involved in commercial real estate investing. Be sure that you have strategies for exiting in a variety of different situations. Without multiple exit strategies, you may end up stuck in a deal that you don't really want.
Mistake #5 - Dealing with Bad Partners - While in many cases the deal or the property can be the problem, in other cases, a bad partner can actually be the problem. If you get involved with a bad partner, it can mean disaster for your commercial real estate deal. In some cases you may just want to get out of the partnership as soon as possible.
Mistake #6 - Taking Risks that are Too High - It is actually possible to take a risk that is too high, which is called overreaching. Going for the big deals too soon can also be a huge mistake. Sure, at some point the big deals will probably come to you, be sure that you don't overreach towards them and end up in trouble.
Mistake #7 - Having More Land Than Cash - Many investors have found themselves making the mistake of having more land than they have cash to actually cover. If you have many properties at one time and you're trying to use the gains you get for one to cover what you are losing on another, then you may never get out of this cycle. Get rid of problem properties immediately, even it if seems difficult to do. Then, take your time and focus on the properties that will allow you to make the maximum amount of profit.
All of these mistakes are very common. Hopefully you can learn from them so you avoid making them yourself. However, it is important that you remember that even if you accidentally make a mistake and get involved in a bad investment, there will be ways that you can bounce back and learn from those mistakes in the future.
Anthony Seruga and Yolly Bishop of Maverick Real Estate Investments, Inc. work with builders, developers and other players in the commercial real estate industry to acquire and develop properties. They use progressive investment strategies that have proved extremely profitable. In addition to their own deals, they teach both seasoned and inexperienced investors how to be big players in the game. Visit the website for more info. Article Source: http://EzineArticles.com/?expert=Anthony_Seruga |
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