Here are some Las Vegas Investing Mistakes often committed by newbie investors.
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 condo, home, four-plex or a strip mall. A lifetime could be spent looking for opportunities in 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 is a massive waste of time.
The investor meets an agent with handful of MLS numbers. 30% of these properties are not available to purchase. They either have a contract pending, are in the middle of a short sale or require the buyer to be qualified by the bank that owns it. Successful investors provide a list the day before they meet their agent and avoid this most common of investing mistakes.
The investor confuses an investment with a second home. They want to spend $100k so they can live in Vegas 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 cold have purchased a rental home and had their tenants subsidize their vacation for a month at the Bellagio. Net income on a 3 bedroom $100k suburban home is $12k/year. Net income on a 2 bedroom condo that sits empty for 11 months = $0. Wealth lesson? Priceless. Don't make this most classic of newbie investing mistakes
The investor doesn't know where they stand financially. The days of easy credit 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. Banks won't look at your offer without proof of funds or an approval letter. Do not put yourself or you agent as it is one of the most frustrating of new investing mistakes.
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.
The investor thinks the properties he sees today will be available next week. 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. This is one of the most painful and costly of all investing mistakes.
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. Despite the "sky is falling" mantra pitched by the media, thousands of properties are purchased for cash in Las Vegas in any given week.
The investor evaluates properties by imagining themselves living in it. They try to picture themselves living in the property and rule out all the "low income" properties. 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. This is one of the huge investing mistakes that even experienced investors fall prey to.
The investor dilly dallies after they found 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 that they don't make one at all.
The investor has a partner who isn't on the same page. This happens 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 keeps looking for the holy grail. Real estate involves risk. Period. There is no holy grail of real estate that guarantees appreciation and/or income. A property can depreciate or sit empty for a long time. Investors who don't have the stomach for real estate need to purchase a Certificate of Deposit from a local bank. Some investors just can't wrap their mind around risk and waste their time needlessly looking for a holy grail.
The investor dumps a bunch of money in their investment. Nearly every investor puts too much money into their property. Perhaps it's an "ownership pride" issue they have been brainwashed with. Tenants will destroy all that beautiful carpet, paint and upgrades the investor so thoughtfully put in. Then the investor gets pissed because they can't imagine someone living like a typical renter. All those upgrades are never recovered by the meager increase in rent.
The investor screws around after the purchase. They are so mentally exhausted after their purchase they go take a 3 week nap. They wait to put a crew together and then take another 3 weeks to bring it way above rent able 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 a after it closes and think in terms of "good enough" for rental standards.