Avoid A Critically Common Real Estate Investor Mistake
(It will save your credit & much, much more)

Real estate investors can make plenty of costly mistakes, and real estate investing can be considered as a high stakes, high risk game.

The particular real estate investor mistake that I’ll cover in this article is so common to beginning real estate investors, that it causes their demise before they can even turn their first investment property for a profit.

The end result to failure could cost them much more than their pride.

Note: If you’re an advanced and successful real estate investor, then there’s no need to read any further, but if you're a "Born Again Investor" as I like to call it, then I hope that this article will show you precisely what not to do.

Finally, if you’re looking to become a real estate investor – which could serve to add 6 or 7 figure profits to your bottom line in the next twelve months, then you will want to read this informative article.

First off – for those who know me by now, I rarely watch television

Yet with the advent of many reality-based real estate investing shows cropping up no TV these days, I justcouldn’t resist flicking on the channel and taking in an episode of “Flip This House” on TLC a few weeks ago.

What I saw on that show was abominable, and a display of the starking reality as to what could happen when rookie real estate investors don’t heed the advice of an investment professional, take matters into their own hands, and become overzealous, money-hungry, profit-starved investors.

While I won’t mention the names of the investors on the show, I will point out it was a trio of successful business professionals who had been friends since high school.
It being their first investment property, they consulted with the onsite expert for the TV show in Atlanta, Georgia, and were told that while they were buying the property below market, all it needed was some paint, a good cleaning, and minor landscaping, and they could quickly flip the property within 6 weeks.

The trio initially agreed with her assessment.

But then their emotions kicked in (overriding their logic),and took what could have been a nice 6 week flip to net them each about $15,000 turned into a 9 month nightmare that is seriously threatening to damage their credit.
Their Initial Purchase price for the property was $160,000 and between the three of them had a maximum budget of $70,000 which would cover carrying costs, insurance, taxes, and then the rehab work.

Here are the numbers of their ORIGINAL 6 Week Quick Flip Plan:

>Purchase Price: $160,000
>Rehab Costs: $50,000
>Resale @ Fair Market Value: $269,000

>>Projected Gross Profit: $59,000

In short order, these three guys allowed their ego's to get in the way, and suffer suffered from what I call the “Green Envy-Rookie Real Estate Investor” syndrome.

Now while you can see and hear about investors in your local market who are prospering, and taking on rehab properties that they improve, build out on, and turn for serious profits, what the beginning real estate investor fails to take into account is that these seasoned and successful local real estate investors had to start somewhere.

Unfortunately these three let themselves to get caught up in the potential of building out an additional wing to the house, embraced grand visions of creating a luxurious property in a neighborhood that didn’t fit that demographic, then proceeded to professionally landscape the entire property.

What’s even worse is that in an effort to “cut costs”, after these beginning real estate investor’s rejected their advisor’s initial advice and called her in to inform her of their “new plans”, they still went against her next set of recommendations by deciding not to include a professional architect in the design.

Nine months later, after a number of set backs and city approval delays, their fix-up costs had soared to $90,000.

Let’s redo the math

>Original Purchase Price: $160,000
>Total Property Rehab Costs: $90,000
>Home Resale @ Fair Market Value: $269,000

>>(Projected Investment Loss: -$1,000)

By the time the show came to a close, even with a staged home and completely remodeled property, the real estate market in Atlanta had softened even more. Due to the poor layout choices of the new addition, local Realtor’s felt that also decreased the value of the home (which could have been saved if they invested their funds with a proper architect who understood the needs of homeowners).

Their suggested fair market value then had now sunk to $250,000 which if sold at that price represents a loss of $20,000

That’s before we even take into account the Real Estate commissions that would need to be paid out, as well as closing costs, etc.

Bottom line – 'Emotion = Cost'.

There are many “Over’s” here that you must avoid.

That is, a compulsion for:

- Over Improving,
- Over Evaluating...and finally, being
- Over Eager to generate a fortune on your
   first deal as a raw rookie

Building a real estate investment business should take a Crawl --> Walk --> Run approach.

I’m sure you can see by now that the process of sprinting through a marathon without so much of a warm-up, or having trained for the event whatsoever, is a cause that will surely end in disaster. This principle applies to real estate investing as well.

Take heed, stay focused, and build your real estate investing empire consistently with one deal at a time, and institute systems, processes, and plans that ensure it will scale and grow in the future to an 8 figure empire that provides you with the ability to enjoy the ultimate freedoms life has to offer.

- Brad Wozny

P.S. For more free information on these investment principles, watch the 4 Free real estate investor training videos I've posted here now.