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No one said investing would be easy. Ask any ace investor and they’ll tell you the many mistakes they have made on their way to financial freedom. When it comes to real estate investing — particularly passive investing — there’s so much written about how simple and straightforward it is that we often underestimate the risks and potential pitfalls in front of us.

But it is because so many investors have made these mistakes and come out on the other side, that we not only know we can overcome these errors, we can avoid them altogether if we’re willing to learn from the wisdom of those who have been there, done that.

For our part, we’ve been in-tune with the real estate market and the world of passive investing for quite some time now, so let us give our would-be and beginner investors some critical advice!

The 5 Common Mistakes Of Passive Investing

Rushing Into a Deal

There’s a balance to be struck when making any kind of investment. While you don’t want to leave it too late, rushing into a deal is also unwise. There should be a healthy level of urgency or motivation when investing in real estate. After all, opportunities don’t last.

To rush into any deal or partnership without doing your due diligence is a terrible mistake. No matter what kind of investment you pursue, you should carefully assess numbers, risk, partners, variables, and potential outcomes. 

If you rush into a deal with due diligence, you have effectively left yourself exposed to risks that could have been easily managed.

Investing Where You Know

We tend to favor the familiar. However, sticking to the markets that you know is not always the best solution for an effective passive investing strategy. 

You need to understand that your current knowledge may not provide you with the best opportunities, based on metrics like local economic performance and the growth (or lack thereof) of your real estate market and its demand. 

You might live in a great investment market but chances are, however, that you can find better opportunities and more sustainable options elsewhere.

Relying on Emotion

There are intangible factors that don’t have to do with actual numbers, like a desire to be involved and part of up-and-coming hot markets or the need to invest in something new and pristine. 

When investors talk about investing emotionally, it often has little to do with the conventional emotions we think of. Think of it more like investing with rose-tinted glasses. Investors tend to overlook flaws, risks, and reality when confronted with emotion.

Your gut may have some wisdom for you, but it should never be the sole factor in evaluating an investment property or market.

Waiting Too Late

Many investors choose to wait until they have all of the information and are completely sure of what they’re doing. They want all the answers! While being informed and confident is key, this can lead to investing when is too late. When they finally pull the trigger, they realize they have lost precious time. 

Waiting too late won’t ruin your investment career, but it will stop it from being all that it could be. Time is of the essence when it comes to real estate investment. Don’t make the mistake of over-analyzing or falling into other anxieties. Sometimes, you just have to jump.

Becoming Too Comfortable

Your motivation to grow can become stale when you reach a certain level of success and comfort as a real estate investor. Portfolio growth is essential in building long-term wealth that sustains dream retirements and financial freedom. 

There are growing pains to be sure, but growing your portfolio is well worth it in the end. Not only does it diversify your risk, but it diversifies and increases your passive income as well as your net worth. Don’t allow yourself to become too comfortable. Instead, plan for how you want to grow and where you see yourself in the big picture.