Real estate can be a powerful investment or a financial disaster if you don’t know what you’re doing. What looked like a great deal 20 years ago in a certain neighborhood might now be a total mess.

Let’s walk through the five most common mistakes rookie investors make, and how to avoid them.

1. Not Doing Enough Research

It may sound obvious, but you’d be surprised how many people buy properties without truly researching the area.

Even as a licensed CPA, I had to do my due diligence. when I bought my first home, it was an empty lot. I had to find out:

• What new malls were coming
• Where schools were being built
• Which companies were expanding nearby
• What the city’s future development plans looked like

This kind of research makes all the difference. Without it, you could end up in an area that declines instead of grows. Just like the neighborhoods our parents lived in 20–25 years ago that no longer look the same.

Pro tip: Visit your county office, research online, and talk to locals. Know what’s coming or being developed before you commit.

2. Underestimating Costs

This one’s a double whammy.

First: Closing Costs

Investment properties often come with:

• Higher interest rates
• No homestead exemption
• HOA fees, and sometimes even a purchase or impact fee just for buying in a certain area

You might be able to negotiate some bank fees or shop for better loan terms, but whatever you do, don’t go in blind.

Second: Ongoing Costs

Many forget to factor in:

• Mortgage interest (hopefully fixed)
• Property taxes
• HOA dues
• Maintenance (like a new roof in a few years)

Cash buyers often have a smoother path with no monthly payments, fewer risks. But even then, you must consider whether that cash could earn you more elsewhere.

Also, don’t forget about taxes. Pro tip: Many real estate investments come with depreciation benefits, which reduce your taxable income. Other investments don’t.

3. Trying to Do Everything Alone

Thinking of skipping an inspection to save a buck? That decision could cost you tens of thousands later.

Hire a professional. A good inspector or advisor can spot issues you’ll miss like foundation problems, zoning changes, and legal pitfalls.

This is an investment. Treat it like one. And when in doubt, ask yourself, “Will I make more money here or somewhere else?”

4. Overleveraging (Too Much Debt)

Remember 2008? Banks were giving out money like candy. Then came the crash, and all of the economic chaos that folowed.

Overleveraging means borrowing more than you can comfortably repay. Sure, a tenant might cover your mortgage, but what if the unit sits empty for 3–6 months? Can you still cover it’s expenses when it’s vacant?

You’ll still owe:

• The mortgage
• Real estate taxes
• HOA fees
• Maintenance and insurance

Golden rule: If you can’t afford to cover the mortgage yourself, don’t borrow money. Hope is not a strategy.

5. Focusing Only on Short-Term Gains

Airbnb income looks great until the rules of the game change. Counties crack down, neighbors complain, and suddenly short-term rentals are banned.

If you’re banking on $3,000 a month on short-term rentals, can you afford to collect only $2,000 per month with a long-term tenant? Will your investment still work?

Always model both scenarios:

• Short-term rental income
• Long-term tenant income

Be sure you’re still profitable either way. That’s how you avoid panic selling and taking losses down the road.

Final Thoughts

These may seem like basic mistakes, but they’re the ones that ruin real estate dreams all the time. I love real estate. I invest in it myself. But I never stop researching, learning, and planning for the long term.

If you have any questions on how to pay the lowest taxes and fees on your next real estate find, be sure to give us a call. We would love to chat with you.