“In Real Estate, the money is in your hands – the possibilities are endless.” – Viral Doshi
If you are a beginner in Real Estate Investing, do you see yourself realizing those endless possibilities? Or are you afraid of beginning because you might make a mistake? Here are the three mistakes that most beginners make that prevent them from being successful real estate investors.
Note: This article has been created based on an internet video show titled ‘Coast to Coast Real Estate’ by Ray Hendricks. What follows is a lightly edited summary of the show.
Ray: Welcome to Coast to Coast Real Estate. I’m your host, Ray Hendricks. I’d like to introduce you to a close friend, Viral Doshi. Welcome to the show. Can you tell us a little bit about your background, and what got you started in Real Estate?
Viral: Thank you, Ray. I’m happy to be here. I began my investing career around 15 years ago in India. I have played many roles in real estate since then. I am a developer, designer, consultant, agent, lender, landlord, and flipper.
Ray: What do you think is the difference between investing in the US versus India?
Viral: It’s an entirely different world. From an investing standpoint, India is much harder. The loan to value is usually 50%, the interest rate is close to 10%, the rental yield is 2%, and house flipping doesn’t exist. This means as a landlord; you lose money from the first day.
Ray: That’s much harder than what we have here in the US.
Viral: Absolutely. Most people in the US have no idea how lucky they are. If I had started my career in the US instead of India, my portfolio today would have been at least 10 million dollars.
Ray: I meet agents and investors regularly. Most of them tell me that they are new to the business and don’t want to make mistakes that they will regret later. What tips can you give a new investor in the field?
Viral: One of the first things my mentor taught me was the Pareto Principle, also known as the 80/20 rule. It basically says that 20% of mistakes cause 80% of the problems. These are the high impact on land mines that need to be avoided. I would say that the three most significant reasons that beginners make are:
- They overpay for the property.
- They underestimate the rehab that it will take to either flip the property or maintain the property.
- They underestimate how long the property will sit before it is either flipped or rented.
Ray: That’s so true. I spend a lot of time with agents and investors who are looking for diversification. Any ideas about that?
Viral: I don’t invest in the stock market because I can’t make the price go up or down. It is like riding a bus: You can only decide where to get on and where to get off, but you can’t determine where the bus goes. With real estate, you have more control. You can influence the price. You can buy at 70 cents on the dollar; you can do smart rehabs and save money. For those seeking diversification, real estate itself has lots of options that you can look at Flips, Rentals, Private lending, Tax Lien Investing, Notes, Tax Deed Sales. The possibilities are endless.
Ray: I fully agree. In closing, can you give a few pointers on how a new investor should begin?
Viral: Here are three things that I can suggest:
- Don’t be afraid. There will always be naysayers in the market.
- Don’t bank on luck. Look at the numbers carefully and buy them properly.
- Most importantly, Take action: Go out, find a property, and make an offer.