Investing in real estate is a big decision that should be carefully considered. It can be pretty daunting, and as such, you should cover all necessary bases. It can be very lucrative if done the right way, even in this climate of higher interest.

Real estate investment helps give your existing portfolio much-needed diversification. It can also be an extra stream of income. And the best part is the nature of the passive income, as you do not have to show up to your property all the time.

If you are a first-time real estate investor, you may feel a little out of your depth, especially without the right information. If this is you and you require a little guidance, we’ve got you covered. In this article, we shall discuss the red flags to look out for before investing in real estate, especially if you’re using a real estate syndicate—most first-time investors use these syndicates. A real estate syndicate is a group of investors who combine their resources to purchase real estate properties. It is usually a great option for first-time investors but has often encountered pitfalls.

In the following paragraphs, we list red flags that indicate you might be making a wrong investment decision. Continue reading to protect yourself.

  1. No Business Experience

Suppose the syndicate you wish to invest via lacks a solid business background; they will be unable to expertly navigate through a market downturn, rate hike, or occupancy slump. This means there is no assurance of profit on your investment.

  1. Passive Operator

Your investment must always be a priority; if the individual handling your investment is not doing it full-time, you risk investing with partners who will not put in the required time and effort needed for a profit.

  1. Sole Managing Operator

If the asset you wish to invest in has only one managing partner, that’s a huge red flag. There is a need for multiple managing partners to guard against unforeseen circumstances. This helps build insurance in the event of changes in the market or the firm’s structure.

  1. Records Only Successes

If the syndicate or operator you wish to invest with has only recorded successes in their history, this might sound like a good thing, but it’s not. It means they’re probably ill-equipped to handle unexpected changes in the market, having never experienced any.

  1. Terrible Communication

This is a big red flag if your operator tends to dodge questions or withhold information unnecessarily. Your operator is not meant to keep you in the dark. Excellent communication is vital in real estate investment; you want an operator who answers your questions quickly, honestly, and directly.

Investment can be a tricky thing, and more so in real estate. You need expert help, opinion, and partners to make the right steps each time.

But with the right resources and partners; you are assured of security for your investments. Do you require further assistance in navigating real estate investments? Or perhaps you need to find the suitable operators to handle your assets? We can help; speak to an experienced real estate attorney here.