Investing in a rental property can help you increase your monthly income and long-term economic growth. However, if you are just beginning your real estate investment journey, it pays to prepare yourself ahead of time. There are plenty of mistakes that you can make, and if you learn about them beforehand, you can save yourself a lot of time and money.
Keep reading to learn some major mistakes that you should be aware of not making when investing in real estate. Use this practical knowledge to plan your property investments better and get the best return on your hard-earned dollars.
Mistake #1: Choosing a Weak Location
When it comes to owning a lucrative investment property, location is one of the qualities that will make your rental stand out from the rest. You should think about your prospective tenants before purchasing and determine whether they would feel the particular area is attractive and inviting.
You should steer clear of enticing offers in poor locations. For example, if the property is listed at a great price but is far away from any local services or amenities. Instead, choose properties that are close to areas where there is a lot of employment. People like having a home close to where they work, so you’ll likely have a larger pool of prospective tenants.
Keep in mind that a particular location may be desirable for some people and not for others. A quiet neighborhood in the town’s outskirts may be a great place to raise a family, but it might not be a desirable place for a young single professional. Use your best judgment to determine the area that your ideal tenants would live.
Mistake #2: Renovating Too Much
Once you’ve purchased an investment property, you might be tempted to perform a lot of upgrades to attract more tenants. While it’s essential to make the necessary repairs and improvements to make your property habitable, you should refrain from overpaying to remodel the entire property if it’s not necessary.
You want to find the best balance between making the property desirable while cutting upfront costs on your investment. Major renovations not only result in large upfront costs, but they also mean that your property will stay vacant for longer while the renovations are being completed. This means you’re losing potential earnings as you have no income from tenant rent payments.
Mistake #3: Not Considering Professional Management Options
As a beginner landlord, you are likely to face more responsibilities than you might expect. You need to draft thorough legal agreements, collect monthly rent payments, maintain the property, respond to emergency repair requests, and deal with any legal issues you run into.
This can quickly get overwhelming if you’re new to the industry. That’s why you should consider hiring the support of a professional property management company for your Greeley property. When you hire a reputable property management team, you won’t have to worry about the daily tasks and worries that a self-managing rental owner has to. Experienced professionals will handle the daily oversight of your property, reducing your stress and time-commitments to your rental.
Mistake #4: Lack of Property Analysis
When making a decision on purchasing an investment property, you need to make sure you have done as much research as you can before signing a deal.
Performing this kind of real estate analysis is the key to making better investment decisions. You should find answers to the following questions before making a decision about a property:
Will this location work well for attracting prospective tenants?
Are there any important developments that are going to take place in this area in the near future? How will these affect your property investment?
How quickly can I earn the return on my investment? Are there more efficient options elsewhere?
What kind of revenue and profit do I want to make? Is this particular property going to help me reach these goals?
What are the unique risks and opportunities for this location and property? How can I find the numbers that would back up my assessment?
Who is the right target group for renting this property? How am I going to reach these people?
What are other property investors doing in the area? Is it a buyer’s or seller’s market at the moment?
Mistake #5: Expecting Overnight Success
Real estate investing won’t boost your financial situation overnight. You have to work hard and put in the necessary time to make it work in your favor. Even then you might not climb to the heights that you imagined in the beginning.
You’ll succeed in time by learning from your mistakes and having the support of like-minded people. Try to get in touch with other property investors so that you can share your stories and experiences. You should also look into hiring a property management company’s services in order to reduce your weekly workload and worries.
With time and patience, you’ll maximize your ROI!
Conclusion: 5 Mistakes to Avoid When Investing
To invest in a rental property successfully, you need to do some homework ahead of time. This will help you prepare for the process and learn from other’s mistakes so that you don’t end up wasting your time and money. By avoiding the 5 mistakes outlined above, you can set yourself up for success with your investment property purchase.
One mistake to avoid is attempting to self-manage your rental property when you don’t have enough time or resources to do it. To avoid burning out or mismanaging and running into costly legal issues, you should hire a professional property manager. Onsite Property Management can help you with all your professional management needs. Contact us today for more information!