Mistakes! They are a part of life we know them, make them and see them. In real estate investment, no Mistake hasn't been made. Significant errors are made by beginners in real estate who do not have possess experience in the field to avoid making them.
In this post, we will talk in detail on common mistakes and how you can avoid them to enable you to have a smooth and successful career in real estate. All these mistakes are self-evident, being aware of the risks and knowing how to prevent them will save you a lot of time and money.
Create a master rental Property analysis spreadsheet
Always have an Excel spreadsheet to help you analyze all deals. Begin with fair market value (FMV), improvements, money down and mortgage/carrying the cost. Secondly move it through rental income, expenses and finally cash-on-cash ROI figure.
Ensure to always run-by your property through your spreadsheet. After putting all the numbers and if your ROI isn't that good do not gamble and move onto the next property. Always base your decisions on key factors produced by your spreadsheet.
Do thorough research
This is the most important aspect; many investors always make this mistake of buying the first property or rental they set their eyes on. Don't be in a hurry; take your time. Never look at a property and ask "Why shouldn't I get this?" Instead, always ask "Why should I get this property?".
Let the numbers do the talking and never assume that you will buy a property unless there is something wrong with it.
Keep in mind you are purchasing ‘numbers.'
Common mistakes property investors make is getting overly emotional about their purchase and envisioning themselves living in that property. In that situation, investors always overestimate and improve the property causing them to invest a lot of capital and time.
It's not always about your needs and preference; instead, it's all about how much you can make off that property. Investing a lot of money to get a higher rental rate can backfire badly.
Try to buy local if you can
The important word to note is ‘if you can.' It's important to purchase quality rental Properties rather than local be flexible and refrain from being hyper-focused on local properties. However, it's an exception if you are residing in an area with a legitimate return on and a vibrant rental market don’t think twice and act fast.
For beginners in property investment, it's advisable to purchase properties in one or two markets. Employing bundling will help enable your property managers to manage your properties at the same time sufficiently.
Bundling will enable you to save on time and cut on expenses; it's also advantageous as you will familiarize yourself with the properties location rather than having your properties scattered all over enabling you to be more efficient with your legal planning and tax. In the long run, bundling will be economical and cost-effective.