Investing in real estate can be an excellent way to make money or a good way to destroy oneself if common sense is not applied.
First and foremost never get emotionally attached to a property. It is like any other investment and needs to be analyzed on paper. Falling in love with a piece of real estate gets more investors in trouble then anyone will ever know. A cash flow analysis needs to be done to determine of a property is worth the asking price and if the deal is good. Anyone who does not know how to do a cash flow analysis needs to learn this step before venturing any further.
Never buy a property site unseen. Yes, there are those brave enough to do so, but as a general rule they already have large portfolios and have been in the business for years. A new investor can lose big on a first deal with this kind of strategy. Look at all potential properties and ask questions.
Do not try to become an overnight success as a contractor if you do not have the necessary skills. Time and time again new investors decide to flip a house and do all the work personally when they do not even know the business end of a hammer from the claw. A contractor or professional trade person will charge a lot more to fix damage done by an amateur than to do the job in the first place. Trade skills take time to learn and in some areas work must be done by a certified or registered professional.
Avoid infomercials. They say you can make thousands of dollars on foreclosures by using the system they sell. It is more likely that an investor will join the foreclosure list by following these reckless fly by night investment strategies.
Make sure you really can borrow the money and make all the payments. Deals that involve fast closings and hard money lenders get a lot of newcomers in big trouble. There is no guarantee that a bank will grant you a mortgage in thirty days after you already borrowed from someone else at 18%. The bank does not care about that in any way shape or form. There is also no guarantee that a property will sell right away no matter how nice or desirable. Once again experienced investors will use these techniques but they have that bankroll to cover any unforeseen problems.
Tax sales and foreclosure sales should be approached with caution. If a house is selling for two hundred dollars there is a reason why no one else wants it. Research the type of sale, if you are buying the actual property or just the lien. Find out if the deed or title is free and clear as the buyer may be liable for any liens against the property.
Slow and steady wins the race. Take your time and learn all you can about real estate. Try to work with experienced investors to understand the business. Create a plan and stick to it. Read any and all other articles offering advice and personal experiences involving real estate.