Pitfalls to Avoid when Investing in Real Estate

Cornerstone Mortgage Group, a leading mortgage company in New Jersey offers premier mortgage services. Whether you are looking for a home loan to purchase your first home or looking to get a better mortgage rate on your current house.

Investing in real estate can be a profitable venture, but it's important to be aware of the potential pitfalls that come with it. Here are some common mistakes to avoid:

Underestimating carrying costs:

When fixing and flipping a property, remember to include expenses like mortgage payments, property taxes, and utilities. Failing to do so can lead to unexpected financial burdens and lower profits.

Overestimating profits:

Selling a property can be costly, with real estate commissions and transfer taxes adding up to 8% or more of the sale price. Don't forget to factor in these costs when determining your profit margin.

Vacancy risk and eviction costs:

If a tenant fails to pay rent, eviction can be a lengthy and expensive process. It's important to consider risk reduction techniques, such as non-refundable deposits or rent-to-own strategies, to minimize the risk of tenant default.

Lack of liquidity:

By avoiding these common pitfalls, you can increase your chances of success when investing in real estate. Always remember to do your due diligence and work with a trusted professional, such as a mortgage broker or real estate agent, to make informed decisions.

If you're looking to invest in real estate, Cornerstone Mortgage Group can help. Contact us today to learn more about your financing options and how we can assist you in achieving your real estate investment goals.

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.