8 Common Mistakes New Real Estate Investors Make (and How to Avoid Them)
Episode Summary:
Investing in real estate is an incredible way to build wealth, but let’s be honest—it’s not all smooth sailing. As seasoned investors, Mike and I have made our fair share of mistakes, and in this post, we’re sharing them all so you can avoid the same pitfalls. Whether you’re a first-time investor or looking to scale, these lessons will save you time, money, and stress.
1. Not Running the Numbers Properly
Real estate is a numbers game, plain and simple. If you’re not calculating cash flow, ROI, and expenses accurately, you’re flying blind. My first property in Portland, Oregon, seemed like a steal at $555,000, but the cash flow didn’t align with the 1% rule. Lesson learned: stick to the math. Use tools like my free rental property calculator to analyze deals thoroughly.
2. Underestimating Expenses
One of the easiest ways to derail a deal is underestimating costs. For Mike, it was rehab budgets that consistently ran over. For me, it was discovering after closing that water bills for a multifamily property were my responsibility. Always factor in maintenance, unexpected repairs, and utilities to avoid surprises.
3. Skipping Due Diligence
Due diligence isn’t optional—it’s essential. Inspections can uncover issues with major systems like roofs, foundations, or HVAC units. Don’t forget niche inspections like sewer scopes, especially for older properties. A missed inspection today can turn into a five-figure expense tomorrow. Pro Tip: Leverage my free property inspection checklist to help guide you through due diligence!
4. Waiting Too Long to Start
The best time to invest in real estate was yesterday. The second-best time is today. Waiting for the “perfect” market or deal will cost you years of potential growth. Start small, learn the process, and let time and compounding work in your favor.
5. Thinking You Can Do It Alone
Real estate is a team sport. You need an investor-friendly agent, a reliable lender, and a property manager to succeed. Don’t try to go it alone—you’ll save time and money by building a solid team and networking with other investors.
6. Not Having a Clear Strategy
Are you investing for cash flow, appreciation, or both? Are you focused on single-family homes, multifamily units, or short-term rentals? Without a clear strategy, you’re more likely to make costly mistakes. Define your goals and stick to them to avoid spreading yourself too thin.
7. Failing to Keep Learning
The real estate market is constantly changing. From evolving tax codes to new financing options, staying informed is crucial. Listen to podcasts, attend meetups, and read industry updates to keep your edge as an investor.
8. Thinking Too Small
Real estate is a long game. Don’t underestimate what you can achieve in 10 years with consistency and focus. Set big goals and work toward them one deal at a time. Remember, every small win compounds into something extraordinary.
Final Thoughts
Real estate investing isn’t about avoiding mistakes—it’s about learning from them and staying in the game. By recognizing these common pitfalls and taking steps to avoid them, you’re already ahead of most investors.
Want to Take the Next Step in Your Real Estate Journey?
If this post resonated with you, let’s connect! Find me on Instagram @cashflowsaga to chat about your financial freedom goals—I’d love to help however I can.
Looking for more resources? Download my free investing tools or explore my 1:1 coaching program, Rental Property Investing 101, to fast-track your success.
Stay committed to the journey, my friend. Your future self will thank you! 🚀
