As someone who’s been recently introduced into the world of real estate investing, it is important to note that there’s a learning curve you have to go through before you become a pro. One way to shorten your learning process is to learn from the mistakes of others.
Here are five common mistakes in real estate investing:
Buying an Old Rental Property
If you’re buying an old home to serve as a living space for yourself, it’s okay to go with an old property, considering the fact that most of the price appreciation in real estate comes from the increase in land value. But if you’re buying an old rental property, then you’re setting yourself up for future headaches; unless you are a really good handyman with some spare time. Save yourself the stress of numerous calls from tenants to deal with several problems an old rental property is very likely to have.
Paying too Much Attention to a Building’s Structure while Ignoring its Location
What do you fall in love with when you see a building? Most likely, you are swayed by breath-taking structural masterpieces. However, when it’s time to put down your money while investing in a property, you can’t afford to pay so much attention to the building’s structure at the expense of its location.
Of all the factors to be considered about a property, the only thing that cannot be changed is its location, especially because this is a vital determinant of land price appreciation of your freehold property. Don’t be so swayed by structure because if your house is located in a good location, you can always renovate it to suit your taste and needs!
Working with an Inexperienced Real Estate Agent
Working with an inexperienced realtor is rarely ever a good idea. If you’re a seller, you need to choose wisely based on factors important to you, such as local experience of agent, connections, commission, etc. Some of which you can assess via online platforms like Wowa.
As a real estate investor, always search for the best local real estate agent, who knows the locality you plan to invest in very well. Location is so important because investing in a good location is sure to bring up the value of your own house. If you have kids (or plan to), consider the kind of schools in that neighborhood and be sure they suit your kids’ needs before you buy a house there.
It is best to have a list of things that are important to you as you set out in your search for a house. This way, you’d receive proper guidance from your agent, as they would have lots of experience in securing good real estate deals that fulfil your requirements.
Underestimating the Importance of Home Inspection
The investor who fails to acknowledge the importance of home inspection and as such, skips this very vital step, is one who is likely to have short-changed him/herself in their purchase. It’s always best to hire a professional home inspector to help carry out a thorough examination of the house you want to buy, and come up with a valid assessment. When you hire a professional inspector, you would not be saddled with a home that has lots of hidden issues!
Underestimating the Ongoing Costs
Some real estate investors make the mistake of underestimating ongoing costs for the house. You need to prepare to make monthly mortgage payments, and also allocate money to cover your property tax, and other such amounts. Also for rental properties one should assume that it has tenant 11 out of 12 months of the year and for one month each year the property could be without any tenant. Never underestimate the importance of ongoing costs of maintaining your property.
Investing in real estate yields bountiful results, and if you’re well prepared to scale through mistakes that blindsided previous investors, even better for you!
An investor who’s able to avoid mistakes such as purchasing an old rental property, not paying enough attention to the house’s location, working with an inexperienced agent, underestimating the ongoing costs and the importance of home inspection; will enjoy the benefits of this investment.