What is Real Estate

Writen by Martin Lukac

No matter if you are a seasoned real estate investor or a first-time buyer, there are some mistakes that you should watch out for.

Buying a home is a true investment. You hope that you buy low, gain value and sell high. But like any investment, there is risk. Market conditions, mortgage terms and property location will factor into how much risk you will face. Here are some common mistakes that people make when buying properties.

1. Leaping with your eyes shut

You shouldn't ever put your money into something without knowing what you are getting, where you are going and what you want out of it. You need to know what you are buying, why you are buying and what you are going to do with it. Too many people set out to "flip" a home without any idea where they are going with it.

Look to the long term, not just tomorrow. Figure out what you want to buy. Decide how long you want to own the property. Set goals and make plans. If you are investing, you better know what rate of return you want and when you will exit.

2. Thinking that investments are for the rich

Investments aren't limited to those with endless reserves of money. If you have five dollars, you can invest in something. You can buy a home without much money. You can buy an investment property without much money. There are many good loans out there that will allow you to put a limited amount of money down. But if you put little to nothing down, you must realize that you won't have as much or any equity in the home for a long time.

You will also pay a higher interest rate, a higher point and a higher monthly payment. If it's a good deal, that's great. But you have to figure out all of the dollars and cents before you get started. You want to be absolutely sure that your investment will pay you back in the long run.

3. Getting rid of a property like a hot potato

I understand the need to buy real estate and sell it as quickly as possible. After all, every month you are making a mortgage payment on the home. But in investment terms, it is often better to hang on to a property. There are added gains, tax benefits and equity. If you are smart and purchase at the right time, the appreciation of the property value could be quite nice.

4. Only looking at what is paying you now

Investments don't always pay us every day. Remember, it is a long term situation.

5. Expecting to always win

When it comes to investments, you aren't going to always win. When you calculate cash flow, appreciation, loan reduction and tax benefits, having a negative cash flow isn't necessarily bad. In the short term, you can have negative cash flows. Remember, long term...

Whether you are looking at your first home, or your fifth, you need to stay committed til the end. You have to keep your goals in mind and stick with your plan. Write down your goals and have others help keep you on track. Good Luck.

Martin Lukac, represents http://www.RateEmpire.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies! Visit http://www.RateEmpire.com today