Real estate can create long term wealth and financial security but unless properly executed, a purchase can turn south pretty quickly. If you buy 100 shares of some stock and it starts to tank you can always panic and sell to stem the losses. Real estate is much less liquid and while you can always sell to 5 top rookie investing mistakesfree up cash, it costs money and takes time. For rookie investors, here are five common mistakes:

 Making a “fair” offer. Everyone wants to play fair. But don’t craft an offer that won’t offend someone. Leaving money on the table will crimp your cash flow. Huddle with your agent and make the lowest offer possible. If you have to go back and forth a bit, do it. There’s an old saying in real estate that if you don’t feel uncomfortable when making an offer it’s probably not low enough.

Lining up a tenant who is also a relative or a good friend isn’t advised. You may feel guilty about charging full market rent or worse the relative thinks he’s deserving of a discount because, well, you’re related. The same can be said with raising rent. And if the rent isn’t paid? You may be forced to evict your cousin.

If it doesn’t cash flow, it’s not an investment. Market rents need to cover not just the mortgage payment but everything else involved with financing and holding. Insurance, taxes and maintenance needs to be considered. Rookies who incorrectly calculate cash flow have a brand new expense. Remember, it’s calculating, not predicting.

Not leveraging when able to means putting too much cash into the investment at the outset. Long term financing requires a minimum of 20 percent down in most cases but putting 40 or 50 percent down ties up cash that can be used for another property.

Knowing what you can afford means having a preapproval letter in your hand from your lender. Trying to arrange financing after an offer has been accepted without any preapproval might mean you lose your earnest money deposit and other upfront costs if the loan request is denied.