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So you’ve seen your umpteenth infomercial with the guy in his neatly pressed button-upped white T-Shirt grinning ear to ear waving his rock-solid no-cash-down rags-to-riches property investment course for 3 easy payments of a gazillion dollars (but only if you call now) and now you are thinking, "wow this looks like a great deal, I better get it fast before the special offer expires." You notice how there’s always a special offer? Anyway, I am not saying this guy isn’t telling the truth, however regardless of which course or school of thought you purchase into there are several key areas that one must elude when engaging in any property related transaction.

Pitfall Number 1: Don’t Overpay!

The whole point in investing is to find properties that are undervalued. How does one find out what is undervalued versus overvalued? Without getting into technical details, the bottom line is you need experience. Yes much like shopping for anything else, property is essentially one of the highest ticket items in the shopping center of life. It’s advisable to stick with one market, perhaps the one closest to you in proximity as a starting off point. Through your experience and asking the right questions, you will eventually have a feel for the pulse of the market you are looking after, and of course identify what is considered a good purchase.

Pitfall Number 2: Know the Market

Yes, you are actually going to have to do more work! This part is really usuals sense though, but executing it where the beauty and the payoff comes in. How do you make cash in property? The most basic way is to purchase low and sell high. So from the first step, you have identified general trends in the value of houses, and are pretty good at spotting undervalued houses. Assuming you acquire that house, you may want to profit from it by selling it off to someone else for a higher price. How can you do this? Well there are many ways. For one, most markets appreciate in value over time so if you want a longer term approach that will work. Making upgrades to the property will automatically raise the price of the house as well. Think in terms of what the market wants, not what you personally want. You aren’t the one purchasing it; you are trying to sell it to someone else for a higher price than you bought it.

Pitfall Number 3: Know Your Budget

It may be a fine philosophy to go through life on a whim, but property is serious business, and thus diligent financial planning and budgeting is critical to your success. Don’t worry you don’t need to be a finance geek, however you need to be disciplined and know your budget from the onset, or you may be finding you are learning that you need to make certain renovations or upgrades, and didn’t anticipate it going over to a certain cost. Think ahead as to what is needed before actually going forth with investing in property.