We all have buyer's remorse. Whether it's a pair of ill-fitting shoes or a vacation that's not quite as picturesque as the brochures suggested, it's easy to make the wrong decision when spending money.
But in real estate, the wrong decision can be hugely costly. Read on to learn about common real estate investing mistakes and how to avoid them.
Failing to Do Market Analysis
Any good investment decisions start with research. That's true for real estate because it changes so rapidly.
Before making any purchase, you must examine local market trends to predict real estate values. Look at monthly house price changes and compare different neighborhoods.
Research broader economic trends, too, such as the local unemployment rate.
Failing to Address Ongoing Property Management
If you want rental income, your investment doesn't stop when you buy a property. You'll need to consider how you'll handle the property management or whether handing the responsibility over to a third party is better.
Either way, it is something you should plan for from the start. Reliable tenants want a proactive landlord who will keep the property in excellent condition and fix issues as soon as they arise.
Not Budgeting for Expenses
Your property will incur expenses, like repairs to HVAC units or homeowners association fees. It's helpful to spend some time writing a budget for your rental.
It will ensure you have enough money to cover essential items and charge a rental fee that covers your costs. Without that, you could find yourself with snowballing expenses that eat into your real estate profits.
Forgetting About Vacant Periods
In an ideal world, your rental property would have back-to-back tenancies, and you'd see consistent, uninterrupted monthly income. However, in the real world, there will be gaps.
You may want a gap between tenants to fix and repair things on your property. Or you may see a gap while marketing the property and trying to find the right tenant.
But you must factor this into your income projections for your real estate investment.
Paying Over Market Price
One of the reasons it's essential to research the market is to ensure you get a competitive price on your property. If you discover unique real estate you think is perfect, paying above the market rate can be tempting.
Don't make this mistake. Remember that this is an investment, and your financial position is more important than your opinion about the property.
Remember to Include Legal and Tax Costs
Don't omit tax and legal costs from your final calculations when buying a property. You could end up with expenses you can't afford to cover or ones that significantly reduce your potential long-term ROI.
Check local laws about the task and the legal implications of your purchase (such as zoning laws).
Real Estate Investing: Getting It Right First Time
Real estate investing isn't a minor thing. It takes time, money, and risk. So it's crucial you take your time to get it right. Use this guide to help you.
Having a professional on your side can also be an advantage. At PMI Atlanta City, we have a wealth of expertise and experience in real estate in Suwanee and can help you make the right choice. Discover more here.
