Even if you know how to get the great deals as an investor you will from time to time make a mistake. But, that doesn't mean it has to cost you thousands of dollars.

One mistake I see in real estate investing is not calculating the cost of repairs correctly on a fixer up property. That doesn't mean you have to lose your shirt in the deal. With the proper guidance from an experienced Realtor who deals in investment properties they can help you recoup your losses even on the worst calculations.

One suggestion is to do a lease option for two years and this can increase your asking price by 5% over current market values. Then you also have made an additional $100-$200 per month from the lease above and beyond your mortgage payments and at the end of the two years with the help of a 1031 exchange you can sell the property and invest the capital gains in to a like kind property without tax implications. (See your financial advisor for more tax advice and doing a 1031 exchange)

Another common investing mistake is paying to much for a mortgage. A great deal can be ruined by bad financing and it isn't something that can be fixed easily, there is a way though!

An example of this is buying a rental property and getting 100% financing at a higher non-owner occupied property interest rate. This is usually at least 1% point higher than the normal rate for an owner occupied property. The way to fix this is instead of renting the property offer owner financing at a small down payment a slightly higher price and a higher interest rate than you are paying.

If you bought the property for $210,000 and you are paying 7% interest, sell the home with owner financing with no credit check for $220,000 with $10,000 down and at 8% interest. You basically have a $10,000 deposit and you will earn extra money every month with the higher interest rate. It gets you out of a bad loan and makes a bad situation great for you. Just make sure you make the owner contract is long enough that when they refinance, you don't have a pre-payment penalty with your loan.

Never assume anything in Real Estate investing! The more you know the less risk you put yourself at. If you think you have gotten yourself in trouble with a bad Real Estate deal, feel free to contact me for advice on making what seems like a bad deal into a great investment!

Todd Clark - broker
Kastings & Associates
(503)524-9494
Todd@IFoundYourNewHome.com
www.IFoundYourNewHome.com