The sizable returns offered by real estate investments can be extremely alluring to California entrepreneurs who are used to fighting for every customer and every sale in one of the nation's most competitive markets. However, the decisive and sometimes impulsive personality type so common among successful business owners is not really suited to the slower-paced and more pragmatic world of property speculation.
Building a business usually involves taking care of day-to-day matters and seizing opportunities whenever and wherever they crop up, but successful real estate investors will generally take a more cautious approach. While real estate profits can be high, one or two poor decisions can be ruinous, and experienced property speculators will only commit to projects after studying neighborhood trends and assessing the area's future growth potential. Entrepreneurs sometimes leap at opportunities just to keep them from competitors, but savvy real estate investors are unlikely to be motivated by the fear of loss.
Entrepreneurs may also fail to grasp how difficult it can be to sell problem properties and how much of a drain on resources building maintenance and upkeep can be. Even expensive business machinery or products with a very narrow appeal can be sold quickly if the price is low enough, but the same cannot be said of commercial and residential property. Real estate is not portable, and even drastic price reductions may not stir up much interest in properties located in depressed or unsavory areas.
Flawed assumptions can be found at the root of most failures, and entrepreneurs hoping to avoid the pitfalls of real estate speculation would be wise to seek advice from those with property market experience. Attorneys may assist entrepreneurs considering commercial or residential real estate investments by assisting them during the research and due diligence stages and providing detached and impartial opinions.