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So, you’ve gotten into real estate investing as a way to make plenty of money and start working for yourself. This can be an exciting decision, but it’s important to know there will be plenty of trial-and-error. This means that you will probably make a few real estate mistakes.
It’s important to do proper research on real estate investing as well as your local markets. You should also think about what goes into maintaining a property. You’ll want to make sure you invest in a property that tenants will want to move into and stay in.
There are many real estate mistakes one can make when jumping into the real estate investing field without any strategy. Real estate investing isn’t a get-rich-quick-scheme, and will require plenty of work. Here are the most common real estate mistakes investors make.
The 6 Worst Real Estate Mistakes
Now before we dive into the primary list of real estate mistakes, if you want to ensure that you are not making one of the most fatal real estate mistakes of all, this is where you need to pay attention. Out of all of the real estate mistakes that people make, failing to connect with a mortgage broker is among the worst. After all, not getting the right financing is one of the real estate mistakes that can bench your portfolio once you get far enough along.
So, to learn how to avoid making real estate mistakes and continue investing, click the link below to book a free strategy call today.
Not doing their homework
Homework isn’t just for school kids – in fact skipping your homework is one of the most common-yet-problematic real estate mistakes. You need to do plenty of research on any property you’re interested in. For example, look at the neighbourhood and compare the prices of several available properties. This will help you determine whether the seller is asking a fair price. You should also determine if any repairs or cosmetic work need to be done to the property. Renovation costs could start adding up quickly. Having a contractor come to see the property might help you estimate how much repairs will cost.
It’s always a good idea to work with a real estate professional. These professionals will usually have more knowledge about local neighbourhoods and property prices. They can also help you negotiate a better price in some cases.
Going in without a strategy
There are many steps that go into buying a property and preparing it for tenants. This is why you need to develop a plan before you even start looking at properties. It’s never a good idea to take your chances on a property just because it’s a good deal. Real estate mistakes like these have cost other investors thousands upon thousands each year. You need to do proper research and planning to assure you’ll end up making money on the deal.
It’s a good first step to decide how much money you’re willing to offer as well as what the property will be used for. Are you planning on using the property for long-term rentals? Will it be a vacation property?
Have your goals in mind and plan out the best way to reach them. If you’ve developed a good strategy, then you should stick to it, no matter how enticing a property might look.
Spending too much money
You may have found the perfect property, but it’s a bit out of your price range. There are certain situations in which you could negotiate the price down—but if not, you may want to move on.
Spending too much on a property will mean that you have less money for any repairs or renovations. You should also always have some money set aside for any unforeseen circumstances that may arise. This could include unexpected things like weather damage or electrical problems that you hadn’t initially noticed. There are also insurance and upkeep costs that you need to think about.
You don’t want to end up in too much debt because of a property that you wanted badly. It’s hard to pay off this kind of debt, even if everything else goes according to plan.
Overspending is one of the most common rookie real estate mistakes, but even as a seasoned expert you need to be careful.
Discover How To Buy Unlimited Rental Properties With This Step By Step Guide
Focusing on one property
In most places, there are plenty of properties with excellent investment potential. It’s important to not get your heart set on one property as things could go wrong. You may be outbid by another investor or notice that there are too many costly repairs needed. In these situations, it’s usually a good idea to start looking for another property instead.
If you are in a popular neighbourhood, then chances are there are plenty of great properties available. Do a lot of research on the neighbourhood in which you’re looking. This research should include the cost of potential properties as well as what amenities are available nearby. You might end up stumbling upon several great properties.
Not taking care of their tenants
After you’ve successfully purchased a property and had people move in, it’s time to start making income. Develop a good monthly rent price for your tenants to assure that you’ll be getting enough cash flow to eventually pay off the property as well as other expenses. Building maintenance and landscaping can cost a lot of money, so it’s important to make sure you’re charging sufficient rent.
Most people recommend that you charge around one percent of the property’s full cost for monthly rent. You can determine a good monthly rent by asking your real estate agent and researching the rent of similar properties.
It’s also extremely important that your tenants stay happy. They’re the ones responsible for your income and could even entice other tenants to move in. If your property gets bad word of mouth from its tenants, then you’ll likely see profits dwindle over time. Keeping a dialogue with your tenants is a good way to prevent this. Listen to their needs and wants. Decide how you can truly make sure everyone is happy without giving into requests that go too far.
Giving up too soon
There are plenty of problems that can and usually will arise during the real estate investment process. That being said, if you have realistic goals in mind as well as a good strategy, then you are sure to reach your financial goals. Having a good team on your side will help assure your success as well.
Find a qualified real estate agent that cares about your goals and can help you research neighbourhoods. It’s also a good idea to have a financially savvy person on your team to help you develop a financial strategy as well as realistic profit goals.
Also, work with an investment mortgage lender like LendCity Mortgages. You can contact them for a free strategy call at the link below.
Investing in property takes a lot of time and work. It’s important to taper your expectations and understand how long it might take before you start making money. If, however, you stay motivated and persevere through all the challenges that come with property investment, then you are sure to reach your goals over time!