For the amateur real estate investor, the first property will produce more than a few butterflies in the stomach. And for good reason. Any new venture, properly planned or not, will present a host of unforeseen events. Even the seasoned real real estate investing tipsestate investor can’t avoid surprises. But there are five things you can do to minimize and even eliminate risk.

 The first is to plan your work and work your plan. Consult the professionals around you and as you review a potential project, use conservative estimates and ask:

  • What’s the true value of the property in its current state?
    What are the rehabilitation and selling costs associated with the project?
  • What will the property be worth when completed?
  • Will the rent cover the mortgage, taxes, insurance and maintenance?

Next, make sure your contractor is one of the best and you have the potential investment inspected at least twice by two licensed property inspectors. Once you close on a property, it’s yours and eliminating costly, overlooked issues with the property will strip you of your profit. Or worse.

Third, create a team and stick with them. A real estate investor must wear many hats in order to understand the entire real estate investment process but you need the valuable advice of real estate professionals on your side. Besides your contractor, you need a real estate agent, and attorney and a property manager. Seeking the advice from those who work full time in their respective industries is nothing short of risk insurance.

Four, make sure your homeowner’s insurance and liability coverage protect your home as well as your assets. We live in a litigious society and real estate can present several opportunities for lawsuit-happy lawyers to seek out ways to recover what you own.

Finally, thoroughly review a final title report before closing on any deal. If there are any outstanding liens on the property, they’ll have to be settled. Have your real estate attorney look for title defects and purchase a title insurance policy to protect your investment long term.