Maybe you have family, friends, or co-workers who have had great success in multifamily investing.
Maybe you heard a podcast or read a book, and decided you wanted a piece of the multifamily pie.
Before you dive in headfirst, I want to make sure that you avoid some of the common mistakes that I see newbie investors make.
Every time you enter a new investment vehicle, it's important that you do your research so you fully understand the risks involved. The great thing about multifamily investing is that the risks are generally lower, and the reward greater than other investments that you could make, like the stock market, for example, but there's still a possibility you might get in your own way.
Know Your Why
I've been in real estate and the multifamily game for a long time, as both an active and passive investor.
When it comes to multifamily investing, I've done a lot and I've seen a lot.
I've learned a lot from my mistakes and the mistakes of others, and the first mistake that I see with a newbie investors is – they don't have a Why.
In other words, they don't have a mission for their money.
Why is it so important to have a Why?
Well, making money is a lousy reason to do anything.
If you don't have a real reason for investing beyond making money, your money won't accomplish much for you. So before you jump into multifamily investing, (or anything, really,) you really need to set goals for your money and have a strong why.
Maybe you want to start a family or give more money to charity or, like me, achieve financial freedom so you have less stress.
When you control your time, you can do whatever you want.
Your Why will help you get clear on the amount of money you need to make in order to achieve your greater goals.
This will create clarity, and help you make better decisions about where to invest.
Do Your Research
Newbie mistakes, number two, three, and four are also avoidable, truly cringe worthy, and all related to entering into a deal.
Let's start with number two – not doing your own research.
There are tons of benefits to putting your money into multifamily, but there are cons, as well.
(I created a video on some of the cons of investing, so check that out.)
As an investor, it's up to you to know the ins and outs of any investment you make.
The truth is, multifamily might not be the right investment vehicle for you. You must educate yourself so you can be confident pulling a trigger on a deal when the opportunity presents itself.
On the flip side, I've seen plenty of people make newbie mistake number three, which is waiting for the perfect time to invest in a deal.
There is No Perfect Time
Here's the thing, it is important to educate yourself, but when is it ever a good time to invest…
Right before COVID, the market was too hot, so you may have thought, I should wait, we’re on a bubble, but then we were in COVID and now maybe we’re headed into a recession…the bottom line is, it’s never a good time to invest from that perspective.
And what about inflation?
It’s eating away at the value of your hard earned dollar every single year and it’s something I take into consideration for every investment.
Don't Rush Into the Wrong Deal
The money you have sitting in the bank isn’t doing much to help you achieve your goals, but you also don’t want to go rushing into the wrong deal, which is number four on my list of newbie mistakes.
Now this rapid rushing into a deal usually happens when someone is turned on to multifamily investing through a friend or colleague, and this person has been given the opportunity to invest alongside people they know and trust.
So they rush into the deal to secure their seat at the table.
What could possibly go wrong?
Well, even if people you trust are putting their money into a deal, that doesn’t mean the deal is right for you.
You’ll want to do your own due diligence before you jump in.
Build Your Network
The final mistake to avoid as a newbie investor is not building an investor network.
I strongly encourage you to seek out other investors and build a network.
Not only will you learn from them, but you never know what opportunities may arise from those connections.
In fact, I've heard of several investor groups being formed through connections made at my annual multifamily event, Dealmaker Live. (So check that out.)
Getting connected with other investors supports you in vetting operators and doing deals and getting yourself into the right deal.
Make sure you surround yourself with people who share the same interest. You can meet them at Deal Maker Live, you can meet them in our Deal Maker Mastermind community…and we also have a free Facebook group you can join to get support.
So, avoiding newbie mistakes begins when you take the time to really think about the impact you want to make in your life.
Knowing your Why will put you well on your way to making successful investment decisions that align with your goals and your values.
Success happens when preparation meets opportunity.
So…are you ready?