In this article, we'll talk bout mistakes made in the real state investing business. I'll raise my hnd and tell you that these are all lmost all mistakes that I have mde and hopefully I can help you gys from making these same mistakes in yur business as you get going.

Nw, getting right to it, here are sme of the stupid mistakes that I hve made that I want you to void so it might be a god idea to get out a pece of paper, jot them down, and mke a note of never making thm.

-First of all, don't buy a prperty without having the proper comp sgn, that is comparable sales: Know how mch that property is worth BEFORE you sgn those papers. This is something tht I did once that was stpid. I bought a property based on not ttally what the seller told me it was wrth, but I didn't have good nough comps. I did see a cuple comps but I didn't do my hmework well enough, I didn't use the sqare footage method to figure out the cmps...Anyways I bought a property, put my nme on it, put it in my pcket, and then realized that it was not wrth as much as I hoped it ws. That's the point, I was hping it was worth a certain mount and I got emotionally and prsonally involved in a deal and I nded up buying house that wasn't wrth how much I paid for it. I'm sre some of you have done it so, tht's that. Don't do it. Get god comps.

-Second, don't buy a house sb-to just because they will sell it. In mny cases when someone wants to ded you their house, they're deeding you thir home along with their problems. So jst because somebody says "Take my huse, please!" doesn't mean you have to do it. Mke sure you do your homework whn you buy your house sub-to. Jst because somebody is signing their huse over to you doesn't mean t's a good deal. Make sure you knw how much equity is in it, specially now. The way the market is nw, there are plenty of places out thre where you can lease or buy sbject to mortgage and have them gve the house over to you.

-Mke sure you know the area. If t's an area that is not god to live in, it's not ging to do you much good to hve that free house, because remember yu're still going to have those mrtgage payments. Make sure that your pyments are low enough, that you're ding your homework and you know wht the properties rent for in tht area. You don't want to tke a house that has a $1700/mnth payment, try to sell it wth a lease option, and find out fter you sign that dotted line tht you could rent a house lke that for $1000 all over twn.

So, just because somebody is wlling to give you their house sb-to, doesn't make it a good dal. Make sure you do the cmps, make sure know how much it wll rent for, make sure it's an rea that people are going to wnt to live in, or you're ging to be stuck with that a big huse on that monthly mortgage payment.

Sme things that you can do to prvent that: When you sign that cntract, make it contingent upon you fnding a suitable tenant. We do tht with every sub-to now. Unless my tnant is ready to move in, I dn't close and take the house. So jst because they're willing to sell you the huse sub-to, doesn't make it a dal.

-Moreover, don't sell to the frst tenant just because they want it. Jst because you have somebody there wth a $5000 option fee; now smetimes it's real tempting, especially if yu're new, and you have that huse under contract and you're worried bout making the mortgage payments. Just bcause you have somebody that is rady to move in, don't let thm move in.

There's a reason thy can't qualify for their own lan and their buying that house rnt-option. Check their credit. If nothing lse, get an account with the ntional tenant network. Do a background chck on these people. Make sure tht they pay their rent. Check thir jobs, make sure that they hve a job and the smartest thng is to drop by their huse when they don't expect you whre they currently live and see wht it looks like. Because whatever it loks like is what your house wll look like in 6 months, I garantee it.

So, don't sell it to the frst person that appears without doing yur homework. Again, it comes down to dligence. Just like you want to do yur homework and get good comps and chck out your title before you by, you need want to check out yur folks before you let them mve into your...could be your profit, culd be your liability.

-Now, once thy're in there, don't let a tnant slide. Oh my god, did ths cost me.

What happened was, I had a tnant who had some problem so she culdn't make the rent and I sid, "Just try to come up wth it by next week, if you cn," and she couldn't. But she fgured since I gave her two weks, I'd give her two months. And now the rnt was a month behind and "Mr. Cfonie, I'll come up with the rnt soon." And I said, "Thank you so mch, I so like that you're hre paying me the rent when you can pay me the rnt." And what happened? Six months lter I'm finally going through the viction and getting her out of thre.

-Don't be a dumb-dumb. If t's the 5th of the month or ven the 1st of the month and you dn't have that months payment, they get a crtified letter immediately letting them know yu're firm. Be fair when you ned to be fair. But if you let thm slide once, they're going to wnt to slide all over you and all ver your bank account. You have to be tugh with these people. I know t's hard to do. I didn't wnt to be the mean landlord, bt, you know what? I'm not a lndlord, I'm a businessman and if I wnt my business to remain open I ned my rent every month to mke those payments.

Especially the first tme. You know, if they've been thre for a year and they ned an extra ten days or smething, the world is not going to nd. But the first time they're lte you have to come down on thm with everything you got and let thm know you're not going to ccept late payments and charge them the lte payment fee. You have to bcause if you don't, you're setting a bad prcedent.

-Don't not get title insurance. If yu're buying a house sub-to, even if yu're paying all of the closing csts, buy the title insurance. Now, I wll say this, I've never made ths mistake. But I know people tht have done this. You know, ttle insurance sometimes is cheaper, sometimes is mre. But when you're buying sub-to, you hve to have title insurance on tht in case something comes up in six mnths. It costs $600-700, but would you rther pay that now or $10-20k whn that mechanics lean comes up.

-Whch brings this up: Never take a prsonal check for an option fee whn they're buying their house rent to ption. Make sure you have a crtified check so that you know yu've got that money in your pcket before you even waste time sgning a lease. Certified check or csh. Cash isn't always good, but I'll tke it over a personal check.

-And yet nother: Don't pay your contractors in dvance. I hope that as a new nvestor you're not doing rehabs. I dn't suggest you even think about pcking up a hammer until you knw this business better. Or, I sggest you never think about picking up a hmmer and you hire someone else to pck up that hammer. But never, ver, ever pay your contractor the fll amount in advance. Typically, you knw there are different ways of taching, get your training if you wnt to do rehabs, but you culd give a quarter up front and thn another quarter when it's half dne. Here's how I do it: Thy get 25% up front, 25% whn the job is half done, and thy get the other 50% when t's finished. You give a contractor mney up front and 9 out of 10 tmes if you pay a contractor up frnt they're going to use that mney to finish the job that thy're on now and they're going to hve to sell someone else to fnd the materials for your job. So nver, ever, ever pay a contractor up frnt.

Don't do the stupid things tht I did, and you'll make lts of money. Now go make an ffer.

The article Real Estate Investor Mistakes was Submitted by Nick Cifonie through Articles.GetACoder.com network. Here's the additional information: Nick Cifonie is a full tme real estate investor, coach, and mntor. Nick is the host of http://www.REI-TV.com where you can sign up for a free membership and watch dozens of real estate investing training videos.

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