Foreclosures in have the reputation of being very profitable investments for real estate investors. While that can be true, they can also be very dangerous investments where you can lose a lot of money. In this article, we'll go 3 of the most common pitfalls investors make, so you can avoid these mistakes if you decide to invest in foreclosures.

Pitfall #1 - "All Foreclosures are Good Deals"

This simply isn't true. Foreclosures are often in terrible condition. For that reason, banks and the government are often willing to provide major discounts on the property's price. Even then, however, the property may not be a great investment.

It's only beginning investors that think all foreclosures are good deals. Experienced investors know that just like anything else, finding a good foreclosure property takes time, expertise and research.

Pitfall #2 - Jumping into Fixer Uppers

We've all heard of people who've made millions buying shambled houses, fixing them and then "flipping" them. While this can be a very profitable model, it also has its pitfalls.

The biggest pitfall is beginning investors who jump in to the fixer market without the expertise to back it up. Unless you can predict how much your repairs will cost, how much you can sell the property for and then work your way backwards to what the selling price must be in order to be profitable, then you're not ready for a fixer upper.

There are many profitable deals that don't require the level of expertise that a fixer does. For a beginning investor, it's usually better to start with those deals.

Pitfall #3 - Not Performing Good Research on Foreclosures in

Good research is a key component to being profitable in the foreclosure market. You must know how much your property can sell for in the market. You should know what the trends in the area are, including community projects, new buildings that are being built, crime rates, etc.

You should also be sure to get a home inspection. If you're bidding on multiple properties in at an auction, it's important that you actually step foot in all the properties you plan on bidding on before you bid on them.

These are 3 of the more common pitfalls that investors tend to fall into. By avoiding these pitfalls, you'll set yourself ahead of most beginning foreclosure investors in

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