Smart Investors Avoid These 10 Dumb Mistakes
You might think that investing in real estate is a quick way to make money. Before you purchase that first investment property you need to check out the list of 10 common mistakes even smart investors make.
- Evaluating your financial situation - Is this the right time for you, to be taking savings and investing in a piece of real estate? Do you have reserves?
- Not doing their home work - You need to learn the basics about tax advantages, cash flow, appreciation, depreciation and loan amortization.
- Buying the wrong property - Just because its cheap doesn't mean it's the right property to generate a return on your initial investment. Buying in the wrong property in the wrong neighborhood can cost you.
- Over paying for a property - You want to keep the emotions in check. You will not be living in the property. This is an investment and from a financial stand point the numbers need to work.
- Not having a home inspection - While even the best properties can look good at first glance, you should still have a home inspection to check for any major or potential problems.
- Having inadequate Insurance - When you own investment properties your insurance needs differ from your owner occupant policy, you now have more liabilities.
- Not charging fair market rent - Over charging can result in a property setting vacant for too long. Check with your local Realtor for market rents based on location, features and condition.
- Getting emotional involved with your would be tenant - If you choose to property manage your property than you need to check all references. This includes previous landlords, employment and credit history don't accept the tenants word that everything is good.
- Not communicating with your tenant - You need to visit the property several time a year and communicate with the tenant to help avoid any potential problems. It's more cost efficient to take care of a little problem before it becomes a big on.
- Not having the right person(s) help you - You need a Realtor who is an investment specialist who is out there looking for the best properties.