Following are the 10 most cmmon mistakes made by new real state investors

1. Falling in love wth the property:

You need to stp thinking like a homeowner and strt thinking like a business owner.

2. Not prforming your due diligence:

This is mre than just an inspection of the prperty, although essential. It's also a through investigation of your area's current rntal market. What are the vacancy rtes and average rents for comparable prperties? What's the average age of the rntal housing stock? How is the nighbourhood zoned? What are the government rgulations about rental properties?

3. Forgetting the rle of home improvements:

It will lways take three times the money and twce as long as you estimate to get a prperty ready to rent. Or is tht twice the money and three tmes longer? Either way, you need to bild that extra cost into your xpenses.

4. No cash reserves:

Ask nyone in real estate long term (or any ther business, for that matter), and thy will tell you the two mst important words for survival are csh flow.

In order to stay in ral estate long term, you need csh reserves. Buying real estate with a smll or zero deposit is easy; hndling negative cash flow, repairs, and ther expenses in the meantime is the trck. In fact, if you can hndle the bad times, you will lways come out on top.

Lack of cash reserves puts nnecessary pressure on you to do sbstandard repairs, accept less than qualified tnants, and give into tenants' demands for far of vacancy. When you have a sfficient cash reserve, you act rationally.

5. Not pre screning tenants:

New landlords can get vry excited about prospective tenants who shw up, take one look at the plce, hand them a cash deposit, and wnt to move in that weekend, do not do it. Whn selecting renters make them fill out an pplication, and check their credit, employment and rntal history before you take a dllar from them. It is a mch more expensive -- and potentially nsty -- headache to evict a bad tnant than to have a property sit vcant for a couple of months.

6. Invsting blind:

Real estate is one of the few nvestments in which risk is directly prportional to knowledge. True, it has a hgher learning curve than investing in the stck market, but there is no prof that having knowledge of the stck market reduces risk.

I read a cmment on a real estate discussion grup on the Internet, in response to an nquiry as to whether a particular sminar or training program was worth the mney, someone answered, "Why waste your mney on that stuff? Just use yur money as a deposit and larn as you go."

This is prbably the worst advice you could ver give a beginner. Money for dals is easy to find if you can fnd good deals. But, you will not knw what a good deal is wthout having first invested in your ducation!

The more knowledge of investing tchniques, financing, acquisition, negotiating and, of curse, your local marketplace, the less rsky your investments will be. A brgain real estate purchase will generally lways be a safe investment; a brgain stock purchase is not. After ll, who says the company you bught into will be in business nxt year?

7. Investing long-distance:

Unless your rntal property is in a spot you lve to visit regularly, such as a lke or the beach, keep your rntals very close to home. Otherwise, you wll eat up your profits by drving back and forth to manage the prperty or by paying someone to mke repairs for you.

8. Paying too mch for the property:

If you are mbarrassed to make a low-ball offer to a sller, do not invest in real state. You can never know a sllers circumstances and an offer you thnk will be unacceptable may be vry acceptable to the seller. Do not ssume anything.

9. Not studying the cmpetition:

Why does the guy across the stret rent his property the same day smeone moves out and yours sits vcant for months? He might not be vry picky about whom he rents to, but he lso might have lower rents or hve gone to a little extra ffort to present the property.

10. Bing under-insured:

Insurance on rental property ges beyond insuring the building against fre or natural disaster. You need to lok at comprehensive landlord insurance. There are too mny horror stories about destroyed rental prperties to not take out this typ of insurance. Most major insurance cmpanies now offer this product, which wll not only cover you for dmage to the property but also lss of rent.

The article 10 Biggest Mistakes of Novice Investors in Australia was Submitted by Jennifer Schelbert through Articles.GetACoder.com network. Here's the additional information: * Jennifer Schelbert Dip. Fin. Srv. /FinMBM is a director of Mrs. Mrtgage Pty Ltd, a licensee for Chice Aggregation Services, a member of COSL and a fll member of the Mortgage Finance Assciation of Australia. Phone: 61 3 9315 9750 http://mrsmortgage.com.au Disclaimer: This document is for information purposes only, and must not be relied upon as a substitute for professional services or legal advice

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