7 Costly Mistakes New Real Estate Investors Make (And How to Avoid Them) ❌🏠
7 Costly Mistakes New Real Estate Investors Make (And How to Avoid Them) ❌🏠
Getting started in real estate investing can be exciting — and overwhelming. Many first-time investors learn lessons the hard (and expensive) way. This guide highlights the most common mistakes new investors make, and how to sidestep them like a seasoned pro.
❌ Mistake #1: Not Knowing the Numbers
Jumping into a deal without a firm grasp on the numbers is a recipe for disaster.
What to Know:
Purchase price + closing costs
Rehab budget (+15% cushion)
ARV (After Repair Value)
Holding costs (taxes, insurance, utilities, loan interest)
Exit strategy net proceeds (flip vs. BRRRR)
Fix It: Use a deal calculator on every property and verify your numbers with a local agent or mentor.
❌ Mistake #2: Overpaying for the Property
Your profit is made on the buy, not the sale. Overpaying destroys your margins.
Fix It: Stick to the 70% Rule:
MAO = ARV x 0.70 - Rehab - Closing CostsWalk away from any deal that doesn’t meet your criteria.
❌ Mistake #3: Underestimating Rehab Costs
First-time investors often forget:
Demo & dump fees
Permits
Contractor management
Material price changes
Surprises behind the walls
Fix It: Walk every project with a contractor. Build a line-item budget and include a 10–15% contingency.
❌ Mistake #4: Skipping the Inspection (or Not Knowing What to Look For)
Just because you’re flipping doesn’t mean you should skip the inspection.
Fix It: If you're experienced, build your own checklist (roof, structure, HVAC, plumbing, electric). If not, hire a professional and pay attention.
❌ Mistake #5: Choosing the Wrong Contractors
Hiring based on price alone is a gamble that often ends in frustration, delays, and poor workmanship.
Fix It: Get 2–3 bids. Ask for references. Set expectations with contracts, draw schedules, and daily check-ins.
❌ Mistake #6: No Exit Strategy
If you don’t know how you’re getting out of the deal, you're already behind.
Fix It: Always have a Plan A (flip), Plan B (BRRRR), and even Plan C (wholesale or rent).
❌ Mistake #7: Going It Alone
Trying to DIY everything is a fast path to burnout and missed opportunities.
Fix It: Build your power team: agent, contractor, lender, attorney, mentor. Leverage experience, don't fear it.
✅ Final Thoughts
Mistakes are part of the game — but many can be avoided with the right mindset and a solid process. Know your numbers. Build your team. And never let emotion overrule your spreadsheet.