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Mistakes To Avoid As A First Time Investment Property Owner

So you’ve decided to start thinking about the future and finally take the leap into property investment. Congratulations! Being a property owner can be incredibly rewarding both personally and financially, but only if you make the right moves. Fortunately, many people have been where you are now, and you can learn from their mistakes to ensure you get the most out of your investment property endeavor. So with that in mind, here are the top mistakes made by first time investment property owners that you should do your best to avoid:

1. Not Treating it As a Business

Make no mistake; investing in property ownership is a business. You therefore need to keep emotions out of your decisions and make smart, analytical moves. This should go without saying throughout the process, from deciding which property to purchase in the first place to filling it with tenants and maintaining it. On that note, it is also a good idea to consider enlisting the help of an experienced property management company.

2. Relying on Appreciation Alone

A lot of people tend to buy property with the expectation that, with time, the property value will go up and they’ll get a big payoff in the end. While property values do tend to increase with time, the truth is that the monetary difference is often not nearly as much as people expect. Additionally, outside, uncontrollable factors like the fluctuating economy and occurrences in the surrounding local community play a huge role in property value. So when you purchase property, you need to not only make sure that there are unique aspects about it contributing to its value but that you are also willing to put in additional work to make sure that happens.

3. Not Doing Enough Research

Many first time investment property owners also unfortunately do not perform adequate research before making the decision to purchase. But just because a place looks good on the surface does not mean it’s automatically a smart investment. It’s important that you do your research into things like the building history and any structural damage / repairs, the surrounding community and any potential crime / economical issues, etc. Doing so will also help prevent you from overpaying on a property.

4. Not Properly Assessing Your Financial Situation

It may seem like a no-brainer, but a lot of people still underestimate the importance of making sure all their finances are in order prior to investment. You need to make sure you at least have enough money for a down payment, much less be able to continue making payments. Even if you can afford the property outright, you need to make sure you have the funds for things like property taxes, repairs and renovations.

Tips to Avoid Paying Too Much for an Investment Property

There is no question that purchasing investment property is becoming something that is growing in popularity. After all, land and property is the one thing that there will never be more of. However, for those who are new to purchasing investment property, there are several things that must be known. Some tips to ensure you don’t overpay for this investment can be found here.

Determine the Median Price in the Selected Suburb

If you have plans to invest in property, you should first find out what the median price for the suburb was and which prices fell or rose in the previous year. Also look into the prices for the past five and 10 years. In most cases, this information can be gathered with an online search.

Utilize the Services of a Buyer’s Agent

It may be smart to engage the services of a buyer’s agent who is an expert in the area and able to provide reasonable guesses regarding the value. The buyer’s agent will also be beneficial if the market is going to auction and make bid’s calmly without any emotion. These services are invaluable when attempting to purchase investment property.

Track the Property Sales

It is a good idea to track the property sales in your selected suburb and learn what properties will go to auction on a weekend. Pay attention to similar properties that are sold, as well. This will ensure you get a great deal on the investment property you are considering.

Be Ready to Take Action

Be sure that you know what you can spend before looking into any investment properties. There is no reason to negotiate a great price and not be able to go through with the deal. It may be wise to seek a loan for the investment property prior to searching. This will let you know for sure what type of investment you can afford to make.

Time is of the Essence

If you are planning to make an investment in property, you have to remember that time is of the essence. After all, if you wait, then it may result in someone else looking to make an investment in a low-priced property coming in and purchasing the property instead.

If you are new to purchasing investment property, you have to take the time to know what to do and how to handle the process. If you aren’t careful, you may wind up spending too much for the property that you are interested in. Being informed and even seeking the help of someone who has invested in property before may be beneficial and help you along the way.