5 Most Common Mistakes to Avoid When Buying Investment Property
Top 5 Mistakes to Avoid in Real Estate Investment
It's often more important to know what NOT to do, than just to do something without any experience to back it up. The following list of the top 5 common mistakes that most first time real estate investors are likely to commit will help guide your real estate investment decision, but by no means is a comprehensive list of possible mistakes that could be made. We have helped hundreds of clients invest in properties, and from every mistake we're seeing, these 5 seem to represent over 90% of the issues. If you can prevent some of the mistakes before investing in your next property, you could easily outperform most investors out there. The following are some of the biggest mistakes which should never be avoided:
Thinking you need to buy a primary residence before owning investment property?
You do not need to own a primary residence before purchasing investment property and one of the most successful strategies for a first time investor is the 4321Hack, since an investor would be able ot purchase a 2-4 Unit MultiFamily Investment property with an FHA Mortgage for only 3.5% Down Payment.
Thinking You Have to Invest in Your Backyard?
The choice of buying a property is emotionally affected by the proximity of your primary residence, or familiarity with the area. You want to be close to friends, family, safe areas, and have access to quaility long term tenants. Investment in property should be treated as such, where a buyer can choose where the money is placed on the basis of logical research and numbers.
Not setting specific investment criteria
Every investor needs a plan and the ability to follow through with the plan. Investing should be a non-emotional experience that keeps a focus and abides by the criteria, so if you stick to your plan you should not be worried about the "ups and downs" of the real estate market. Let your underlying investment criteria dictate how you manage the property. Investors with a less clear definition of the criteria may face major headaches or costly errors.
Investing in a particular Real Estate Market Because You Have Family Nearby
Family or money usually complicates rather than simplifies things. Unless you have family members that are in the construction trades and willing to assist with repairs, buying a property close to family members should not weigh heavily on your investment criteria.
Not Factoring in Maintenance and Vacancies
This part of the real estate investment should be considered as part of the overall expected return. A percentage of your monthly gross rent for maintenance and the same for the vacancy, would depend on the age and condition of the building, as well as the gross rent received. It's a huge mistake that most individual and first time investors overlook, but maintenance and vacancies need to be accounted for to best determine your overall return on investment.
Real Estate Investing
Real Estate Investing is one of the most stable and proven strategies to build wealth and gain financial freedom, but it takes time and a good strategy. Many of the worlds billioinaires have gained vast amounts of wealth through real estate. Please feel free to reach out if you have any questions, or want to buy your first investment property.
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