The investor comes to town without an agent lined up.
The investor steps off the plane thinking agents are just standing around on the tarmac waiting to show properties. Good agents are slammed with other investors who are prepared. The only agents who are standing around with nothing to do are agents who don’t know what they are doing.
The investor hops off a plane unprepared.
They don’t know how much to spend or what to buy. They don’t know if they want to purchase a home, condo, four-plex or a strip mall. A lifetime could be spent looking for opportunities in Las Vegas. Smart investors do their homework and chat with a good agent weeks before arriving. Driving around in the Las Vegas heat looking at real estate without a plan causes serious brain damage. If you want a place to start, go here before you make plane reservations.
The investor meets an agent with handful of MLS numbers.
30% of the properties on Zillow or Realtor.com are not available to purchase or occupied. They either have a contract pending, are in the middle of a short sale or require the buyer to be qualified by a specific lending institution. Successful investors discuss inventory and market statistics before they meet their agent.
The investor confuses an investment with a second home.
They want to spend $100k so they can party like a rock star for a month. After they have driven around in the heat for a couple hours they realize that it’s foolish to spend $100k for a 2 bedroom condo when they could have purchased a rental home and had their tenants subsidize their vacation for a month at the Bellagio. Investors who want to live like James Bond visit Las Vegas like everyone else and stay here nearly for free.
The investor doesn’t know where they stand financially.
Easy credit days are over and nearly 3 out of 4 investors are shocked to find out that they no longer qualify for a loan on an investment property. They thought that since they had awesome credit and few thousand dollars under the mattress, they could play Donald Trump. They spend all day looking at investments they can’t have. Driving around in the heat without an approval letter is a massive waste of your time. Paying cash? Prove it. Listing agents will not even look at your offer unless proof of funds are attached.
The investor thinks his approval letter enables him to purchase anything.
Many investors don’t know that some banks won’t look at an offer unless they are approved by the bank that owns the house. An investor could have a billion dollar line of credit from Bank of America and Wells Fargo won’t even look at the offer. Every week, some investor storms off after learning this little bitty tiny fact. Listing agents also track which lenders really suck. I won’t name them here but pay attention to what your buyer’s agent says.
The investor thinks the properties he sees today will be available tomorrow.
Every day in Las Vegas, 140 properties are purchased. Every day. On any given week, hundreds of juicy investment properties are purchased. Many investors are stunned to discover that their favorite property was purchased by the time they got back home. 3 of the properties they see while hunting are gone by the time they have dinner.
The investor thinks he is the only bargain hunter in town.
Most investors NEVER get the house they wanted. They spend days & weeks kicking and smelling a property only to discover someone else bought it. As of 11/15/2017, every single property is getting multiple offers and sold over list. It usually takes about 8 offers before an investor comes to Jesus.
The investor evaluates property by imagining themselves living in it.
They try to imagine themselves living in the property and rule out all the properties that need some TLC. They purchase a property they could live in and discover later that the cash flow is terrible. Successful investors think in terms of cash flow, risk and return – not the color of the carpet or type of appliances that exist.
The investor dilly dallies after they found a perfect investment.
After weeks of research, hand wringing and analysis they decide to pull the trigger 4 days after they went inside and fell in love with a property. Yep. Someone else beats them to it EVERY SINGLE TIME. Successful investors do their homework and pull the trigger the moment they found what they are looking for. Unsuccessful investors are so worried about making the wrong decision they usually don’t make one at all.
The investor has a partner who isn’t on the same page.
This happens frequently with the “husband and wife” teams. The wife wants oranges while the husband wants apples. Successful teams choose one person to make the purchasing decision after they have decided which type of property to get.
The investor swings for the fence.
They want to fly down to Las Vegas and hit a home run their first time at the plate. The only players hitting home runs are the ones living here swinging at the ball every day of the year. These local players spend lots of time striking out. Savvy investors are happy with second base because 7% returns on cash are good enough.
The investor dumps a bunch of money into their rental property.
This sin is committed nearly every time by our local investors. Tenants will destroy all that beautiful base molding, backyard improvements and upgrades the investor so thoughtfully put in. All those upgrades are never recovered by the meager increase in rent. Then the investor gets pissed because they can’t imagine someone living like a typical renter.
The investor screws around after the purchase.
They are so mentally exhausted after their purchase they go take a 2 week nap. They wait to put a crew together and then take another 2 weeks to bring it way above rentable standards. They get so focused on grinding vendors down on price that they throw away $2k in rental income. Successful investors get the property ready after it closes and think in terms of “good enough” for rental standards. This mistake happens frequently with our local investors.