3 Costly Pitfalls Real Estate Investors Need to Look Out For

Even experienced investors can get caught off guard by avoidable mistakes - and it usually costs time, money, or both. Whether you’re buying your first property or your fiftieth, a few common mistakes keep popping up. From overlooked fees at closing to problems with unreliable contractors, these mistakes can kill your investment before it even gets started.

Let’s break down the top three so you can avoid them from the get go.

#1. Overlooking Hidden Closing Costs

Most investors expect to bring a down payment to the table - but that’s just the beginning. What gets overlooked are the additional costs that show up before you even get the keys.

These “hidden” expenses can sneak up on you if you’re not prepared for them upfront.

Closing costs alone range from 2% to 4% of the purchase price. On a $200,000 property, that’s an extra $4,000 to $8,000 - and that doesn’t include prepaid taxes, homeowners insurance or other lender required fees. Some loans require you to pay these in advance which adds to the upfront out of pocket cost.

The problem? Many investors only budget for the down payment and assume the rest will fall into place. It won’t.

To avoid surprises, ask for a detailed breakdown of estimated closing costs early on in the process. Your lender and agent should walk you through these numbers so you can plan with confidence - not scramble at the finish line.

#2. Being Underfunded at the Closing Table

Running short on funds at closing isn’t just inconvenient - it can derail the entire deal. Many investors plan for the down payment but underestimate the full amount needed to actually close. That gap often shows up in the form of taxes, insurance, lender fees, title charges, and more.

You might think you're ready to sign, but if you haven’t accounted for every upfront cost, you could find yourself scrambling to cover a few thousand dollars - or worse, risk losing the deal entirely.

The fix is simple: always budget at least 2% to 4% of the purchase price for closing-related expenses. And don’t wait until the last minute to confirm these numbers. Make sure your lender or agent provides a detailed cost estimate early so you can come to the table fully prepared.

#3. Not Vetting Contractors Properly

A bad contractor can turn a good investment into a money pit. Missed deadlines, inflated quotes and subpar work aren’t just frustrating – they cost you real returns. For investors, especially those managing properties out of state, working with the wrong crew can delay rent readiness and extend holding costs.

That’s why referrals matter. Word of mouth and verified reviews are your best filter when choosing who to trust with repairs, renovations or ongoing maintenance.

At NREMG we’ve taken that one step further. To protect our clients from these risks we’ve built our own in-house construction company and work exclusively with a vetted network of subcontractors, vendors, and staff. These are people we’ve worked with for years – not one time hires.

This gives investors a big advantage: consistent quality, faster turnaround times and fewer surprises. Whether it’s a small fix or a full rehab, working with trusted contractors makes all the difference.

Final Thoughts: Smart Investing Starts with Fewer Surprises

The most successful investors aren’t just focused on returns – they know how to avoid the mistakes that quietly drain time and money. From underestimating closing costs to hiring the wrong contractor, these are common but preventable pitfalls with the right planning and support.

At National Real Estate Management Group we help investors navigate every step of the process – from strategy and acquisition to renovations and full-service property management. Whether you’re buying your first rental or expanding your portfolio, our team is here to make sure you’re prepared, protected and positioned to grow.

Have questions or are ready to partner with a team that knows the terrain? Contact us today to learn how NREMG can support your next investment.

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