“Learn from the mistakes of others. You can’t live long enough to make them all yourself.” ~ Eleanor Roosevelt
New to real estate investing? Even if you’re a veteran you may have accidentally overlooked or underestimated these 5 common mistakes!
Lack of Planning
The most common mistake among new investors and veterans alike is to act impulsively. You may buy a house because it’s a ridiculously good deal, but then realize it needs some improvements in order to be in line with other rental properties in the neighborhood. Once improved, you may find out that the rental market is extremely competitive in that one neighborhood and you will end up sitting on your property for 8 to 10 months before finding the perfect tenant. This is working backward – everything about a particular home and neighborhood should be reviewed in advance and planned for.
Picking a City or Neighborhood Because You “Like It”
This ties into the above mentioned topic and lack of planning (and research). Just because you love Clearwater, Florida, and have your own home there, doesn’t necessarily mean it’s the perfect place to invest in rental properties. Sure, it’s close to your home and you can oversee the properties more easily … But, is there a market for long-term rentals? Or just short-term seasonal rentals?
When you invest in opportune properties, you will see a great return on investment, but it won’t be in month 1. It’s important to understand what year 1 will look like so that you can budget accordingly and do not get stuck relying on income that may or may not come in. Year 1 contains the initial price of the property, renovations and the holding costs while finding a tenant, and may have some additional line items you weren’t expecting.
Choosing to push renovations off to the side or save them for a rainy day will not only delay the time it takes to find a good tenant, but it often results in bigger problems in the future. For example, repairing a leaky roof today could have a much more attractive price tag than replacing an entire roof, interior drywall and even mold down the line because water built up over the course of several months. Now you’re stuck with a big repair bill, and in worst case scenario a tenant that needs to be displaced.
Pricing Too Low or High
Pricing too low will result in lost income opportunity, and pricing too high will leave your rental property sitting vacant for longer than expected.
Want to avoid these 5 mistakes with professional help on your side? Investors can even limit the amount of research necessary to invest in property when working with Graystone Investment Group since our team is already familiar with the real estate and rental markets and the opportunities that exist.
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