I speak to a lot of potential real estate investors on a daily basis answering their mortgage questions. After a few questions of my own, I am able to determine that most of these people say they want to get in to real estate investing, but they never have the courage to make the commitment. These people are just seeking information. They have the term “analysis paralysis”. Over analysis has them stuck. They want to continue to read books, go to real estate courses, and talk with people in the industry, but they can’t seem to gather up the nerve to jump in to the game for a variety of reasons. They have no plans in place, no clear cut goal with a time frame, and no preparation to move forward to invest. Information is great, but at some point have to put into practice what you learn.
For many newbie investors, the shock comes when they discover how much it costs to acquire an investment property. They have not considered their purchase price range, down payment needed, what their payments will be including interest, principal, taxes, insurance as well as possibly private mortgage insurance. Closing costs have to be considered. Rental rate, utilities, repairs, carrying costs, vacancies (investor has to pay mortgage without a tenant), property management fees or investor managed property, legal fees, and any other costs that arise have to be factored in the equation.
For the newbie real estate investor that never takes the first initial step to get their first rental property tends to lose out over time. They lose out on the potential equity that is paid down by their tenants paying rent. Possible equity appreciation on the rental property is lost. The experience gained from being a first time landlord venturing out into a business in real estate (http://breaico.com/blog/real-estate-as-a-business/ ) link is a lost opportunity.
Even if you make mistakes which many investors have previously, you gain experience and knowledge. Be proud of yourself for trying because most people will never make any attempt at stepping outside of their comfort zone to try something new. Take action is what you must do to achieve anything in life.
Brenda Harper, MBA
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