We’ve researched 7 common mistakes that every property investor at one point in their real estate investing career has experienced.
If investing in properties was easy, everyone would be doing it. Luckily, many of the mistakes property investors often fall into can be avoided. If only property investing is as easy as it seems, then a lot would be doing it.
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We’ve researched 7 common mistakes that every property investor at one point in their real estate investing career has experienced.
Mistake #1: Bad Financing
Finance is your make or break. Bad financing if not done properly is the common cause of major investment setbacks.
Whether it’s a High-interest rate or High monthly payments, know that bad financing is something that can easily be mitigated when you know your options beforehand.
Mistake #2: Bad Location
High growth areas and growth potential – location is key. We always say this – you need to strategically plan your next property portfolio – Where? Data, research, and market forecast are vital information you need to acquire.
Property value always starts with location. The people and businesses who will eventually buy and rent from you start their search with location and then evaluate the property on the rest of their criteria.
Bad locations are at higher risk though some still opt to go for it – unconventional, that’s how it is and it is only a question of whether the end goal is satisfied or not.
Mistake #3: Overpriced properties
There are many great properties available for competitive prices, but some homes don’t offer true value for money. Sure, they look the part, but there may be other similar properties available for less.
DO NOT Overbid on a property can have a waterfall effect of problems. Buyers may overextend themselves and take on too much debt.
Do NOT overpay for a property! There are always other opportunities around the corner. Sit tight until the right deal for the right price presents itself.
Mistake #4: Miscalculating Expenses
Paying the mortgage is one – but maintaining and upkeep is also a different set of expenses you should not be underestimating.
You’ll need to allot a certain amount of budget for these types of expenses;
- Furnishing the home/renovation/upgrades
- Appliance maintenance and repair
- Property taxes
- Homeowner’s insurance
- Cost of monthly utilities
- HOA fees
- Roofing
- Mowing the lawn/ lawn equipment
- Landscaping
- Updating HVAC units
- Plumbing repairs
Mistake #5 – Missing on Due Diligence
We know that feeling when you finally find a property that ticks off all the items on your checklist. That feeling of excitement, coupled with the fear of missing out.
Yes, we understand all of that.
People will tend to ignore documents and fail to read the contract in its entirety, which could result in them losing their money, the property, or both. So review the documents with a legal adviser to be sure that they are authentic and up to date.
Mistake #6: Misconception on Resale or Rent Value
There are appraisals and property value growth indicators that allow you to properly determine what your property will be worth in the future.
You need to know and understand your market and what could possibly affect rent and value. Get professional help or a competent realtor or appraiser who knows the area well in order to help determine potential resale and rent values for the future.
Mistake #7 – Being Afraid to take Action
We had this a lot – most of our clients say they are timid or afraid to take action. For most first-time investors, being afraid to take action is the common enemy.
You will never know the answer until you take action. Property investing is widely known for its guaranteed appreciation. Don’t you think stalling on decision-making could make you miss out on great opportunities?
SOLUTION: Seek Professional Advice
Having the right team of experts on your side can make all the difference between a property investment success and failure.
Knowing when and where to go could make all the difference.
Our property consultants are well experienced and willing to provide the support and guidance you need to guarantee a smooth investment experience.
Gil Elliott is the Managing Director and Founder of Positive Income Properties. Gil has a rich background in business consulting and property investment. All of these he gained in his nearly four decades of experience in the real estate and marketing industries.
