Did you know that real estate is Americans' second most popular long-term investment?
This popularity makes sense. Real estate is a relatively safe investment and one that can bring people serious profit.
Whether you're looking to buy a home for your family or flip a house, making real estate investing mistakes can be easy. Continue to read to learn what these mistakes are and how to avoid them.
1. Not Paying Attention to Repairs and Maintenance
Here's the first tip of this real estate investing guide: whenever you want to buy a home or building, you have to ask yourself, "how much is it going to cost me to maintain this property?".
Sure, you may find a house that appears to be in flawless condition. Still, that doesn't mean it won't need maintenance at some point.
New investors often ignore this "future" cost factor and end up disappointed with the property they purchase. In contrast, experienced investors know that they need to be able to spend at least 2% of their real estate value yearly. After all, they might need to pay for these costs.
So, add this one to your real estate investing tips list: be prepared for future maintenance or repair costs to ensure you don't find yourself in trouble.
2. Failing to Make a Plan
Before buying a house, you need a plan. You must know whether a property has the potential to generate income or gains and what it would take for it to happen.
When there's a hot real estate market, jumping on the bandwagon and buying a property carefree can be tempting. Among real estate investing myths, you'll hear something along the lines, "if you're not investing when the market is in favorable conditions, you're losing money." But, that doesn't consider how unpredictable the market can be. So, you must remember to think about what you'd do if the market crashes and your predictions don't turn out as you wish.
3. Getting Poor Financing
There are many real estate investing mistakes easy to make, but this one you must avoid at all costs: getting poor financing.
It isn't hard to find several exotic mortgage options. At first, they may seem great: they may allow you to buy a home you wouldn't be able to afford if you went for the typical 30-year mortgage agreement.
Then, the worst happens: interest rates rise. At this point, people realize that getting an adjustable-rate mortgage or interest-only loan isn't that wonderful. It led them to live a nightmare.
So, don't let that happen to you. Ensure you have the financial flexibility to pay for your home even if rates go up. Alternatively, you can devise a plan to convert your mortgage to a fixed-rate one down the line.
In general, it's best to stick to a fixed-rate mortgage to avoid future concerns.
4. Real Estate Investing Mistake: Overlooking Tenants' Needs
If you're looking to buy a property for rental purposes in Kissimmee, Florida, consider who your renters are likely to be (e.g., college students, young families, or singles).
Families will seek areas with good schools and low crime rates, while college students may prefer to live in a lively area near their university. So, ensure you match your investment to the type of tenant likely to rent in your property's neighborhood.
Stick to Real Estate Investing Facts
Before plunking down cash or getting a mortgage, sort out your investment strategy. A common real estate investing mistake is rushing to acquire a property seen as an "unmissable" opportunity. Avoid doing this to prevent future regrets and headaches.
Indeed, take your time to think about the type of house you're searching for (e.g., vacation rental, commercial building, single-family property). Then, work out your purchase plan and search for properties that match such a plan.
If you're looking for property management services, want to market your property for rent, find a tenant, screen a tenant, and more, we can help! Contact us now!
