Make no bones about it: the real estate industry is rife with warnings and challenges. But if you play your cards right, the rewards can be great and your road to financial freedom all set.

An industry that offers plenty of opportunities for both novice and experienced investors, mastering the property game entails you do your research before plunging into a sector that’s known for its volatility. As a novice investor, it’s totally natural for you to make mistakes on your first investment foray, but a great way to avoid them? Research, research, research and learn from the mistakes of those who have come before you.

There are common mistakes shared by past investors that can be avoided early on and can help shape you into a more confident investor. Here are three of the basic but most notable real estate mistakes that investors can learn from to navigate the real estate market:

Having an identity crisis

How do you see yourself as an investor? What kind of portfolio would you like to manage and grow? Do you want to diversify in different industries or just focus on real estate alone? What kind of yields are you looking at? Short-term or long-term? Are you looking into becoming a major player? Do you want to eventually pursue this full-time or just as a source of passive income?

There are many questions to answer when entering the real estate market, but the biggest questions are those that are about you as an investor. If you are unsure of where you stand, it will reflect in your investments, or the loss of it. The best way to minimize this is to set your goals, the achievements you would like to see, and how you see yourself as a property investor. Be realistic and keep both feet on the ground. This is an industry that requires your smarts and a clear head.

Being a cheapo

Naturally, everything would feel too expensive on your first investment, or any other investment that would follow later on. The biggest mistake you could probably make is going cheap. There are plenty of investors who make the mistake of compromising quality by going with the cheapest options, whether in materials or worse, in choosing their contractors. A good or bad contractor can make a world of difference in your investment goals for a property or how it will fit into your portfolio.

A good contractor will not only make sure that your investment is serviced and repaired properly, they will also make sure that your property will comply to such rules and regulations as city or building laws. Less than desirable contractors may seem cheap but can cost you more money down the line, i.e. a contractor who drops out in the middle of a project would force you to bring in another contractor—an unavoidable expense should you wish to continue.

Take the time to interview contractors, or better yet, get recommendations. Tap into your local network of property managers who may be able to point you in the right direction. However, make it a point not to rely minor works on your contractors—try to identify the jobs you may be able to do on your own, but make sure that this is something that you can reliably accomplish yourself.  

Being impulsive

If you are the impatient type and base your decisions on how you feel, then maybe you should look for another industry to enter. Real estate requires guts, true, but it also requires a clear head to manage risk. There will be plenty of temptations during your search for a property, and sometimes the temptation can be so strong that you ignore the red flags or warning signs. Take a step back when you feel like making an impulsive purchase. Breathe and do your research. Not everything is always as it seems in properties, especially those that have been around for a while.

A property can look old and charming, but how does this fit in your portfolio? Do you know how long and how much it will take to do the necessary renovations? Are there even possible renters or buyers? Will the location compensate for the amount of repairs you have to do to make it viable? Do not let your emotions take hold when canvassing for properties. Get into the search with a game plan and stick to your goals.

The bottom line is that the results are always worth the wait. Do your homework and do not cut corners. A good investor is one who knows how to manage his risks and shortfalls. Always learn from your mistakes. The real estate industry is an industry where you will be required to continuously study and learn.