It can be one of the most lucrative and fulfilling industries around if you do it right, but there’s also no getting away from the fact that real estate has some huge risks attached to it.

In short, beginners can get their fingers burned very quickly. What looks like an excellent deal on paper can quite quickly turn into one that is losing them money left, right and centre.

All of the above is the reason we have pieced together a brief guide for those beginners who are looking to try their hand in the markets. Let’s now take a look at three important points you should look to bear in mind.

Don’t get emotional – you are buying numbers

One of the biggest mistakes that real estate investors make is developing an emotional attachment, says Pedro Martin Terra Group. You need to remind yourself that you are not buying a home for you and your family, but you are instead investing in numbers.

This means that even if a house “looks” perfect, it probably isn’t until you have cast a hard look at the numbers.

At the same time, during the renovation phase, you need to remove all forms of emotion. Don’t spend bucket loads of money on putting together the perfect kitchen; it’s probably not going to result in any increased payback. It might look good, but you’ve got to look at the bigger picture and calculate just how good your balance sheet is going to look.

Buying local tends to be better

This next rule isn’t necessarily hard and fast, but it can certainly help matters. The benefits of buying local are that you tend to know the area better, and it’s much easier to keep an eye on things. You can see how the market is going with your own eyes, and you just have a better outlook on everything.

Of course, we’re by no means suggesting that you shouldn’t look further afield with these real estate investments. However, if given the option, sticking to a property that is local to you will usually work out much better.

Try and keep everything together

This next point ties in perfectly with the one we have just talked about. You could search the entire country and find the very best real estate investments with the only drawback being that they are located in completely different states. Suffice to say, this is quite a huge drawback.

Even though the deals might represent excellent value for money on paper, logistically this is a nightmare. From a legal perspective you suddenly have different state laws to take into account, as well as probably registering a different LLC in each one. You also have to somehow manage these, and occasionally travel to them, which will eat substantially into your bottom line.

Again, this is all about efficiency. Owning properties across multiple states isn’t something that you should definitely not do, but in the interests of simplicity and efficiency it will help if you don’t follow this path.