5 Mistakes Real Estate Investors Make (And How To Avoid Them)

Whether you’re just getting started in real estate, or are a seasoned pro, there are several common mistakes investors make that can hurt their business. Luckily, many of these snafus can easily be avoided! Below we’re sharing 5 mistakes real estate investors make, and how you can use Backflip to prevent future blunders.  

1. Jumping into an investment without a plan

The last thing any investor should do is purchase a home without knowing what they plan to do with it. It can be difficult to resist a good deal when it falls into your lap, but without a strong strategy in place, that deal can turn sour. 

Whether it’s BRRRR, value add fix-and-flip, or even bite-size loans to other investors, having a strategy is essential.

2. Failing to do your due diligence

Residential real estate investing can be fairly complex. From finding quality properties to getting the right financing terms – there’s a lot of research and analysis within the process that, if done incorrectly, can turn a potentially good deal bad. To ensure you’re investing in the right property, at the right price, you need to understand what questions to ask, what your purchasing options are, and how to identify a good deal when it pops up.  

You can start with a quick, thorough valuation of the property. Using the Backflip Analyzer to quickly understand if a property is right for you, saving valuable time. 

3. Not networking with local investors

The competitive nature of residential real estate makes many people wary of building connections with other investors in their area. However, there’s a lot to gain by building relationships and growing your local network. These connections can become a great resource for you, whether you’re looking for vendor recommendations, leads on deals, or just people to chat real estate with.

To aid our members with this problem, we host regular networking events for local Backflippers all over the country, and online. We hope to see you at one soon!

4. Working with slow and expensive financing partners

When working with lenders, the funding process can move slowly, and just as often high interest rates can make it difficult to turn a strong profit on your investments. In the current market, real estate investors don’t have the luxury to sit and wait in the hopes of getting competitively-priced financing.

Backflip’s goal is to make the financing process faster and more efficient, while providing you with better terms. Once you’re ready to move forward with a property, you can get pre-approved for financing right from the Backflip app. 

*All Backflip applications are non-binding and will never initiate a credit review

5. Focusing on one property at a time

The best investors in the world understand the power of using leverage to fund their deals, and are able to increase their overall earnings by taking on more properties at the same time. As you start looking to scale your business, having multiple projects can help you make more profit from less money, rather than focusing on just one property at a time.

The reality is that if investing in real estate was easy, everybody would be doing it. Fortunately, many of the mistakes investors fall into can be avoided with due diligence, proper planning, and strong partners.