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Ranked #1 on Google For "Preforeclosures Northern Illinois"
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8 Common Mistakes You NEED to Avoid!
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Mistake Number One |
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You find a property, put it under contract, and find out that it’s not a good deal. You have to close or you could be sued! |
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The Solution: |
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Put contingencies in your purchase agreements. Why do you want contingencies? Contingencies provide you with a way out of the contract. For example, suppose you find something wrong with the house between the time you sign the agreement and the closing date, you’ll be able to get out of the deal only if you’ve put in the proper contingency. Always try to put in a contingency so that you can walk away from any deal for almost any reason and at any time. You can also consider using options, which give you the right, but not the obligation, to buy the house. |
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Mistake Number Two |
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Analyzing property too much, looking forever and never taking the plunge. |
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The Solution: |
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This is called "paralysis of analysis" and is very common. Focus on the numbers.
How much is it worth? What are the repair/carrying costs? Make a decision and move on it. Remember that nothing you ever did was perfect the first time around. Get out and talk to us! |
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Mistake Number Three |
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Running out of cash, either during a rehab, between houses, or at tax time! |
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The Solution: |
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Always keep a cushion. Put money away. Keep a job until you have a good base built up. Remember: If you flip a house you are going to owe a good chunk of tax money. |
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Mistake Number Four |
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Spending too much money rehabbing a house that you bought to sell. |
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The Solution: |
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Don’t overdo your rehab. Remember that this isn’t going to be YOUR home. It is your investment. Don’t spend unnecessary dollars. Make the house as nice or just a little nicer than its neighbors. Concentrate on the small, cheap improvements that make a big visual difference! |
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Mistake Number Five |
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Paying for a repair or construction job before its 100% complete |
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The Solution: |
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Never pay for a job until it is 100% complete. If you do pay 100% before the job is done, what is the incentive for the contractor to finish? Almost doesn’t cut it unless you are prepared to finish for them. 100% is 100%. |
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Mistake Number Six |
| Not putting every repair in writing! |
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The Solution: |
| Put every repair bid in writing. Outline what exactly will be done, what is included and what is not, and costs associated. Also, in your contract, put an amount that the contractor will be charged (daily amount) if they do not complete the job on time. |
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Mistake Number Seven |
| Signing the first buyer that walks through the door |
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The Solution |
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I know you are excited to sell your house, but NEVER sign a contract to sell a property without knowing if the buyer is pre-approved, not just pre-qualified! Over 50% of all real estate contracts fail because the buyers cannot get a new loan. Get their pre-approval letter. Do you want to tie up your house for a month or 2 just to see the deal fall through? Remember that you are going to have to pay those holding costs. |
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Mistake Number Eight |
| Not getting started soon enough |
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The Solution: |
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Start Now! Get the right information, read all the books you can, talk to other real estate investors and get out there and talk to us! Do your first deal. It will be the most difficult, but after that they get easier! |
As a final note, we cannot stress that last mistake enough. We know that it is definitely easier said than done. In any case, now you know about how to fix the house up, and what mistakes you need to avoid. All that’s left is to learn a little more about how exactly to buy them, and take the plunge.
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