It’s easy to see why real estate holds so much appeal for many first-time investors. After all, some smart real estate investments can provide you with a lifetime’s worth of passive income – and potentially even become your primary source of money.
While it’s true that certain real estate investors can prove extremely profitable, many fledgling investors make a variety of missteps that ultimately hinder their chances of generating healthy returns. As such, anyone new to the world of real estate investing should be mindful of the following hindrances.
Sticking With Unprofitable Areas
Location is vitally important to any real estate investment, especially when you are investing in a timeshare property. After all, properties found in desirable locations are able to fetch higher rents and sale prices than those located in areas with little to no demand for housing. However, while you are investing in a timeshare, retaining a timeshare attorney will help you out.
As such, if you invest in a property in an area where demand is on the wane, you shouldn’t be surprised if you fail to see sufficient returns.
In the interest of avoiding such an outcome, make a point of researching the location of every prospective investment property that strikes your interest.
Your research should involve looking into local property values, rent prices, median income, demand for housing, rate of growth, and growth potential.
This information will help ensure that you’re able to make an educated purchasing decision and significantly lower your chances of committing to an investment that you’ll regret.
So, if there’s very little demand to be found in your current areas of interest, don’t be afraid to branch out. For example, if you’ve been limiting yourself to your current locale, consider branching out into more profitable cities, townships, and states.
Consulting with seasoned investors or a highly-rated investment company can help you determine the best state for real estate investing.
Overpaying For Investment Properties
Even if you become enamored with a potential investment property, it’s important to avoid overpaying. While wanting to make an expedient deal and get your hands on a sought-after property is perfectly understandable, such haste is liable to lead to a purchasing decision that you deeply regret.
So, when carrying out location research, take care to pay special attention to local property values – and the prices similar properties in the area are selling for.
Should you discover that similar properties are selling for far less than the seller is asking, make a point of asking the seller why they think their property is worth so much more. If the seller fails to provide a satisfactory answer to this inquiry, request that they lower their asking price to reflect the ones attached to other properties in the area.
If the seller is un-amenable to this suggestion, it may be in your best interest to walk away from the deal and start scoping out other potential investment properties. Regardless of how in love you are with a particular property, you should never allow yourself to be taken advantage of by an overly-stubborn seller.
Failing To Properly Assess Properties Before Buying
Any investment property you’re giving serious thought to purchasing must be subjected to a pre-purchase inspection from a certified home inspector. First off, protecting property with the best home insurance may not be an option if a professional inspection doesn’t take place.
Secondly, in the absence of an inspection, you won’t be able to make a truly informed purchasing decision. You may think that doing a detailed walkthrough of a property is enough to spot any problems that are present, but as a non-professional, you’re unqualified to locate or identify a wide range of issues – and discovering large-scale problems with an investment property long after a sale has gone through is the last thing you want.
So, regardless of how forcefully a seller pushes back against a professional inspection, make it clear that this is non-negotiable. Should they outright refuse to allow an inspection to take place, simply walk away from the deal.
Going into the real estate game unprepared is liable to have considerable financial consequences. While it’s true that real estate can be a highly profitable field of investment, success is by no means guaranteed, and failure to put sufficient thought into your investments is likely to result in disappointment and tremendous buyer’s remorse.
So, if you’re eager to start making money with real estate investments, be on guard for the hindrances discussed above.