One of the fastest ways to lose money as an investor is by not doing the required homework. While you may trust any referrals that come your way, it is always important to make sure things meet your criteria. After all, the house in question will be your investment. It is up to you to be in control of your education, learn your craft and know everything about the property you can. The one deal that you let your guard down on and assume there are no problems is the one that can damage your portfolio. Therefore, regardless of the situation, you want to make sure you do your own homework. Assumptions will lead to lost profits. This is the only way you can make sure there will be no surprises.
The concept of “doing your homework” applies to both your business and each respective deal. Even if you are only investing part time, you should spend a part of everyday reading and learning about the business. Instead of catching up with social media during lunch, see if there is any real estate news that may be applicable to you. You may think you are just buying time and will never apply what you are reading, but much of networking is being able to carry a conversation about timely events in the business. If you aren’t up to speed with current real estate trends and news, you may be left behind.
Doing your homework also means staying on top of your specific investing area. At least once a week you should check in and see if there are any trends and changes that could impact the market. Changes in taxes, increased foreclosure filings and new housing permits can all impact the market you are currently investing in. By spending just a little bit of time every week catching up, you will know if a prospective property in a specific town is still a good deal or if it would be wise to pass and move onto another location. It doesn’t take a lot of time or effort, but it is important to put the work in.
Finally, doing your homework means taking the time to learn everything you can about a subject property. Drive by the property at different times of the day to see if there is any traffic concerns or neighborhood issues. Walk around the back and basement of the property again and see if you missed anything during your initial visit. Look at the title, deed and anything else you can find on the property. You should have a system or checklist in place with every deal to help you speed this process up, but you also need to feel comfortable with every purchase you make. Simply taking something you heard at the water cooler and blindly applying it to your investing business is not the best idea. This is your money and your business. You need to make sure that you are making the best decisions, but you also need to make them quickly. By having a system in place, you can quickly go down your due diligence checklist.
Doing your homework should be something you do every week, if not every day in your business.Subsequently, if you don’t do your homework, you will quickly fall behind.