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Real estate investment—good experience or big mistake?

Perhaps a friend or neighbor of yours has become successful by investing in real estate with a focus on flipping houses. You are intrigued and want to try your luck at this kind of venture.

Investing in real estate has its rewards, but you should keep in mind that pitfalls are common. Here are four mistakes you should avoid making.

1. Rushing into a purchase

As a new real estate investor, you must study the market. Take a look at the neighborhood of each property of interest, the resale values in the area, the condition of the properties and related details. It would be in your best interest to review dozens, if not hundreds, of deals before selecting one.

2. Underestimating the cost of renovations

Once you choose a property, do not underestimate the cost of necessary renovations. Obtain quotes from multiple contractors. Set a realistic budget and stick to it.

3. Forgetting about soft costs

When analyzing a deal, remember to include soft costs, such as agents’ fees, legal fees and closing costs.

4. Not having the right team

You need knowledgeable people to help you make informed decisions and lower your risk of making a costly mistake with your investment. As a first-time investor, you need to do a great deal of research, listen to a variety of opinions on a variety of subjects and rely on others' expertise. In addition to real estate professionals, your team may eventually include a financial advisor, an accountant with a background in investment properties and an attorney experienced with Florida real estate transactions, contracts and litigation.

Looking ahead

When you take your time in choosing your first investment property, resist rushing through the deal, pay attention to detail and rely on professional help, your foray into the world of real estate investments will likely be a good experience rather than a big mistake.

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