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July 1, 2020
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01. Not Knowing the Market Numbers

Knowing your market is as important as any other factor in real estate investing.  This means having a neighborhood by neighborhood analysis of the supply curve and average days on market.  Both of these data formulas can be found through the assitance of a real estate broker using the MLS.

02. Mistaken Value

Most new investors use Zillow, e-appraisal, or Trulia (or even worse, an average of the three) for determining the value of a property.  This is fatal – learn to do a “comparable sales” analysis.

Get your own data, too.  Relying on the listing broker to give you comps for properties is like asking the barber, “How’s the haircut”.  Learn to find your own comps using public data websites like Trulia.com, but use the raw data to come to your own conclusions, not the automatic comps.

03. Underestimating Repairs

If you have no experience in rehabbing homes, then you shouldn’t be estimating repairs yourself.  Get at least 3 difference contractors to give you bids.  Get these bids in writing, with detailed breakdowns of labor and materials.

04. Poor Choice of Contractor

A bad contract won’t have a license, will bill you by the hour, and/or won’t work by a written contract drawn by you.  A good contractor agreement is essential, have a local attorney draw one up for you.  Make sure you get signed lien releases every time you write a check.

05. Bad Contract

Most real estate courses have crappy contracts because they are not written by attorneys.  My advice is to learn your local Realtor form and draw up a few addendums.  An attorney can help you with this.

06. Wrong Legal Entity

Most investors form an LLC for their investing practices.  Is this right?  Maybe, maybe not.  There any many tax issues involved in choosing an entity that should be review with a tax professional, NOT just an attorney (unless the attorney in question has tax knowledge, like me!).

07. No Marketing Plan

Most investor hire a real estate agent to find them deals and that’s it.  There’s not enough good deals on the MLS to make a living on so you need a better plan to market to FSBOs, foreclosures, estates, divorces, and other sources ofmotivated sellers.

08. No Script

OK, so got a motivated seller on the phone and now what?  Uh, uh, uh – what questions do you ask?  Have a written script you keep by the phone so you always know what to say.

09. No Business Plan

If you fail to plan, you plan to fail. You’ve heard that before, but how many investors actually write a business plan?  The truth is very few.  Take some time to write a good, detailed business plan that you can follow as your goal.

That’s 9, but I can think of at least 100 more.  Don’t make mistakes, get a mentor on your team to guide you through the process.

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William Bronchick, ESQ.

Nationally-Known Attorney, Author, and Speaker

Attorney William ("Bill") Bronchick, the host of Legalwiz.com, has authored six best-selling books and is sought nationwide for his 30+ years of real estate and legal knowledge. He has been interviewed by numerous media outlets, such as CNBC, TIME Magazine, USA Today, Investor Business Daily, Forbes, and the LA Times, to name a few. William Bronchick is the co-founder and past President of the Colorado Association of Real Estate Investors and the President of the Colorado Landlords Association. Click on the "About" link above for more information on William Bronchick.

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