From market unpredictability to unplanned maintenance costs, investing in real estate certainly carries its own set of challenges.
Whether you’re well-versed in real estate investing but considering a new market, embarking on your first investment property, or trying your hand at flipping a house to maximize value, you don’t want to go the trial-and-error route when hundreds of thousands of dollars (or more) is on the line.
Below, we’ve gathered nearly 50 real estate investing tips from members of Forbes Real Estate Council, the foremost organization for real estate experts and entrepreneurs, so you can learn from their mistakes and successes.
1. Unlike on TV, house flips don’t happen fast.
“Reality flip shows make the purchase, transformation and sale of a home seem like it happens in a few weeks’ time. I guess it would be boring to watch the permit approval process, engineer drawings, inspections, insurance, how they are financing the deal and the fact that many investors have to hold the property for 90 days due to the 90-day flip rule, but that is the reality.” – Hillary Hobson, Highest Cash Offer
Read 8 other TV-inspired flipping myths.
Why: Turn on HGTV and you’ll find a whole lineup of house-flipping shows. But unlike a TV production, which includes heavy editing and fabricated drama for entertainment, flipping a house in the real world requires much more than a one-hour time slot.
2. Spend time at a property before you buy.
“Sit in your car outside of the property from 6 a.m. to 9 a.m. and from 9 p.m. to midnight before you commit to buying it. You will see what is really happening at the building and in the neighborhood during those times.” – Lee Kiser, Kiser Group
Read all 10 tips for first-time investors.
Why: With so many details bogging down your brain as you embark on your first investment, consider these important foundational tips that easily could have slipped through the cracks.
3. Don’t expect any free advice.
“When I think back about all the people who I help make millionaires, yes, I’m happy for them, but I have learned over the years that my wisdom is not free. Now I either partner with the clients I mentor with a joint venture partnership, or have a contract drawn up that makes me part owner in their company for my contribution to their success. It’s either paper up or lawyer up… that’s the rule to my new game.” – Angela Yaun, Day Realty Group
Read 11 other lessons real estate pros have by making mistakes.
Why: Don’t chance it. This advice from people who have been there and done that serves as a great guideline of what to do and what not to do.
4. Don’t invest where growth is happening. Instead …
“We often notice the best investments are in the spillover markets, which are communities just outside where all the growth is happening in the hot market. As real estate values skyrocket, this instantly starts pricing people out of the hot market and they often look at the spillover markets that mirror most of the winning characteristics of the hot market.” – Sharran Srivatsaa, Douglas Elliman
Read all 10 signs an up-and-coming market is worth investing in.
Why: Waves of urban areas are now becoming hot real estate commodities (we see you, downtown Detroit), increasing the area’s potential and property value. A number of factors contribute to these newfound demands, but those behind the scenes have a front-row look at what’s worth investing in and what’s worth pausing on.
5. Accept that everything will be more difficult than you think.
“Long-term plans work only as long as you accept the reality that the journey is going to be difficult. Over the years I’ve learned that any large-scale project I tackle will probably take more effort than I assume, longer than I project and I will likely encounter immense challenges along the way. Author Stephen Pressfield describes this creative challenge as Resistance, and one can overcome this by studying their peers and meticulously emulating their best practices.” – André Bueno, founder, The Bueno Group
Read 5 more best practices for new real estate investors.
Why you should read it: Written by a successful bootstrapping real estate entrepreneur, this piece focuses on what it takes to truly persevere (and win) in any market.