Real estate investment is regarded as one of the most profitable investment opportunities in present time. However, many investors make mistakes while investing in real estate. For example, many investors approach this kind of investment with the mentality of becoming rich as fast as possible. Due to this wrong mindset, they often lose substantial amounts of money. This article describes some of the most common mistakes made by real estate investors.

1. Paying little attention to capital expenditures

   Real estate investors often ignore capital expenditures while assessing their cash flow and mistakenly consider such expenses to be one-time expenditures. Capital expenditures may include replacing a furnace, air conditioning compressor, refrigerator, etc. It is important for the investor to calculate each and every expense regardless of how insignificant it might be. By doing so, the investor can assess his/her actual cash flow more accurately. Deals that may have looked good on the surface might turn out less attractive after careful consideration of all short and long term expenditures.

2. Not doing enough homework

   Like other professions, real estate investors need proper education and training. Many wannabe investors bypass many important elements and have trouble down the road. If you want to become a real estate investor, you should educate yourself well before taking on your first deal.

3. Not having cash reserves

   It is quite important for an investor to have enough cash in reserve for each property. Investing in a property that eats cash rather than generating cash flow may be the greatest mistake a real estate investor can make. It would result in negative cash flow that in turn, may reduce your capability to purchase more properties. Therefore, as a real estate investor, you should find ways to generate positive cash flow so that you can cover a mortgage, pay property taxes and perform monthly maintenance. Maintaining cash reserves also helps you create long term success in your real estate investments. Lack of cash may compel you to perform substandard repairs or rent to a non-qualified tenant.

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Following the collapse of the world economy triggered by the sub-prime crisis; European countries emerged in the international market as potential targets for investments. The European and English currencies lost much of their relative value against the US currency making them more affordable to foreign investors. With this unique economic situation in mind, investors from around the world have found a new home: Europe.

One European country that is an obvious spot for investment is Spain. The ultimately dry climate plus all year round sunshine are great for sporting and other outdoor activities. Buying a property in Spain is indeed a sound idea as the prices locally fell sharply and even more so relatively to the US dollars. Spain also has benefited from a large growth for the last 10 years thus has good infrastructure and will offer great returns when the economy rebounds. Great bargains can be found where prices have dropped and demand for great holiday lets will un-doubtfully pick up when the European economies recovers and tourists flood again to the warm and sunny Spain.

United Kingdom and more specifically England may also offer great opportunities for wise property investors. Property prices have started to pick up in 2010 as the local economy started a small recovery. Supply of properties is still low as builders delayed new projects due to lack of funding from struggling banks and historically strong demand for new properties is preventing the price from falling. Assuming that the economy recovers in 2011 prices will rapidly rise again; savvy property buyers should actively seek to invest while prices are still rising slowly.

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There are a number of people in today’s market that are looking to put their money to work in more ways than one. Sure you can invest in the stock market like every other person out there or just buy an annuity that will give you a steady stream of income. Or you can invest in the real estate market that is just filled with more properties than anyone has ever seen. Because of the persistent presence of bank foreclosures, the real estate market has many amazing deals. This type of investment is not for the faint of heart, since your money may be tied up for months to years. There are a few ways you can invest in real estate that will make you money. The most recognizable way that people have made money was buying homes to flip in the short term. The other option is to hold them as rental properties for a few years while it is rented out for a steady stream of income. If you are looking into flipping homes you need to have expert knowledge of the area to make sure you are buying it at a price that will make you money. You also must consider the money needed to update the home so that it will sell quickly. As a general rule the nicer the home looks compared to others on the market the faster it will sell. However the investor must be careful not to put too much money into the home where he has no chance of recouping that upgrade. For example putting in a pool will cost more than you will get when you go to sell it. It might look great but items such as pools will not return the investment required to put it in. The goal in these types of investments is to buy and sell as many houses as you can. You need to find the right people who will help you achieve this goal such as local contractors and Realtors. They will be the key to helping you find the property, fixing it at the best price and then putting it back on the market.

The other type of real estate investing that is going on these days is to buy and hold as a rental property. There are many condos and smaller homes on the market that make great rentals. These can be so cheap that in a few years your entire investment has been paid off by your tenant. You still have to do your research and know the area before you buy. Making sure that your condo is in a safe part of town with stable employment is very important. If the tenant loses a job the faster he or she finds a new one the better off everyone is. Also knowing the area rents give you an idea of what your monthly income will be from your investment. With this monthly cash flow coming in you can even take part of it and trade the currency markets. With the help of forex trading charts you can take that monthly rent and double it. This is not to say that you might want to spend it on a vacation for you and your wife, but a forex position is a good way to hedge against your real estate holdings.

You can also buy real estate because you feel as if renting is giving your money away. This is very true. While renting you are not building wealth and only paying the owner of the property to go on vacation and play on his boat. Once you become a home owner you have that feeling of accomplishment knowing that you own a home. You don’t have to worry about a security deposit or wondering if your landlord will ask you to replace the carpets. The entire home is yours and you are free to do whatever you want to it. After all owning your own home is considered the American dream, and in today’s market you can buy that dream for a lot less than in the past.

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As a general rule our investing business focuses on buying distressed real estate properties, rehabing them and renting them to good long term tenants. Over the past year we've been able to generate on average a 20% annual return for each single family house we've purchased using this model.

From time to time we need to generate capital to finance new acquisitions. Flipping retail homes is one way to raise relatively quick capital albeit it can take up to 6 months to get cashed out. Flipping is generally frowned upon by sophisticated investors and I for one generally agree. But there are times when waiting 5 to 10 years before cashing out of a rental property is just too long to wait to unlock your equity in an investment.

We found a good deal on a 4 bedroom 2.5 bath 2800 sq ft home in a strategic area of Michigan for about $57,000. We intend on investing another $35,000 into repairs and improvements. Comparable homes in the area are selling between $130,000 to $150,000 in under 6 months. This would give a net profit of between $38,000 to $58,000 before closing costs are factored in.

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Buying opportunities, for those looking for bargain deals, are still good and should extend well into 2010 and 2011. Housing starts according to the Commerce Dept. have come in lower than expected for 2009.

One would naturally think, as home builders attempt to reduce inventory, that home prices would stabilize. To a certain extent they have stabilized albeit temporary.

First time home buyers who have been sitting on fences, automobiles and motorbikes are now out in force trying to take advantage of the $8,000 tax credit set forth by the U.S. government. Ironically, the tax credit is due to expire on November 30'th. This small flood of home buyers has temporarily created a high demand in low to middle income housing which in turn has created more competition among investors seeking cheap deals on foreclosures and HUD homes.

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It would make sense to us as consumers that if our home values are plummeting due to the stale economy, that the taxes we pay on them would draw back for some relief as well. It's not a pleasant thought, but by the time the lower taxable values may be realized by the owners, the local governments will most likely be stretched so thin that the rates will have to be raised as well. We may not have much levity when it comes to lowering or keeping our taxes at an affordable and fair rate, nor can we do much about the tax policy that is controlled by the government. But you can most assuredly, make sure that your tax assessment is equitable to your property by arming yourself so as not to be overpaying.

Take a close look at the following three ways to empower yourself when facing an assessment increase:

First and foremost, check your local assessor's office for errors on your homes details. Make sure your square footage, rooms and improvements, if any, are listed exactly as your home is. Humans make errors and the assessor will most likely adjust your assessment on the spot should you point out such an error to them. Most homeowners aren't even remotely aware of inconsistencies in regards to their assessments and tend to just accept things at face value; especially in the older neighborhoods where the transfer to computers may have had to be done from paper records. Visit your local assessor's office or web site and make sure everything is copasetic about your homes details.

While you're at it that web site or in the office, go ahead and pull the neighbors cards as for a comparison in style and value. Pull at least 5 other similar properties within 5 miles of your home and if they are assessed at 10% lower then yours, you could have a very good argument for the lowering of yours. Keeping equity amongst the owners is a big part of the assessors' job.

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