If you are a beginner in property investment, never think that you can become the best in a month, let alone in a day. There are just so many things that you need to learn, especially from your or others’ mistakes.
In this article, we are going to focus on some of the biggest mistakes in property investment. Hopefully, this article can serve as a way for you to anticipate common mistakes and avoid them, and not learn the hard way.
Plan before buy
Never ever buy a property before planning what you want to do with it. The world of property investment is often moving at a very fast pace, where if you are late then you will mist the window of opportunity.
And to move fast, you need to plan everything beforehand. This is especially true when there’s a hot market. I know it can be difficult to resist the temptation and jump on the bandwagon. But you need to think about things like the type of house, location, repairs, advertisement, etc. So the best course of action would be to plan and then look for properties that fit your plan.
Don’t try to handle everything on your own
Many buyers and real estate beginners think they can handle everything without anyone’s help. They think they already know everything there is to know about buying and investing in real estate. But in practice, there will be things that you don’t expect – things that can catch you off-guard.
As a property investor, your job is not only to invest but also to create a relationship with other investors and consider every possible resource. To make it easier to remember, try to know people like a savvy real estate agent, a good attorney, an insurance representative, a home inspector, and a handyman.
Not caring about tenants
Being a landlord is difficult, but too many people think otherwise. They think that being a landlord is just sitting and doing nothing all day and let the tenants do their own things. But that’s wrong, dealing with people is always busy and things can go wrong quickly.
As a landlord, you need to screen your tenants carefully. You need to know a lot about them: are they singles or married? College students or an employee? Young or old? People have different needs, for example, a family wants a location with low crime rates and good schools. And once they become tenants, you need to make sure that they are happy.
I know this might sound obvious to you, that overpaying is a problem, and you should avoid it. Unfortunately, many real estate investors are overpaying without realizing it. The problems start when buyers didn’t do their research before buying.
Yes, searching for the right property at the right time can be difficult and time-consuming. But once they managed to find the ideal property, they become anxious to have the seller accept their offer. Anxious buyers tend to overbid, and this will create more problems somewhere down the line.
First, start by researching other similar properties that are sold recently. Compare the prices and see if your dream property is too expensive or not. If you hired a real estate agent, they should be able to give you this information quickly.
Buying older properties
I have seen people making this mistake a lot. They bought older properties because of the cheaper price tags. But the problem is, older properties may have hidden costs that you don’t know and they can be very expensive.
Let’s say you bought a 40-year-old property. Now to sell or rent it, you must repair it so it is habitable and damage-free. These costs can be very expensive depending on the state of the property. Besides, you won’t be able to take advantage of depreciation benefits, and not many people want to live in an old home.
There you have it, some of the biggest mistakes in property investment. Many beginners are still making the same mistakes these days, and that shouldn’t happen to you after reading this article. Remember to do your research thoroughly and not be hasty with your decisions.