Every investment involves risk, and property investment is no exception. Despite this, for many people property remains one of the safest and most profitable investments around. This is because there are a number of factors that can be controlled when investing in property- such as the choice of location, the type of property and how long it is held for. However, even with these controllable factors, investors can still experience problems with their property investments.
In this blog post we will look at some of the most common issues encountered in property investment, and how to deal with them.
1. Underestimating the costs of investment.
Anyone who has ever thought about investing in real estate knows that there are a lot of associated expenses. In addition to the common costs of upkeep and maintenance, there are also mortgage payments, property taxes, insurance premiums, and the fees associated with hiring professionals like property managers and contractors. And that’s not even taking into account the need for extra funding to cover unexpected repairs or other emergencies.
For all of these reasons, it’s essential to create a list of all potential expenses before making any investment decision. Only by adding up all of the monthly costs can you get an accurate picture of whether or not the income from tenants will be enough to cover all of the necessary expenses.
2. Going overboard with the renovations.
Most properties need some degree of renovation before they’re ready to be rented out. It’s common for investors to go over budget on renovations, but being aware of the property’s neighborhood and tenant needs can help you determine what needs to be done. You should also be sure to not make wrong or unnecessary improvements. Knowing what needs to be renovated before you start any work will help you bring in the highest ROI. Working with a professional home inspector will also help avoid this mistake.
Renovating a property can be a big undertaking, but if you’re aware of the potential pitfalls, you can avoid them and end up with a successful rental property.
3. Doing it by yourself.
Many real estate investors believe they can take on the job all on their own. Many find out too late that hiring a team of experts is the best way to a successful investment. Investors should consider hiring professionals for a number of reasons. Some people every real estate investor should have on their team include: an experienced realtor, a qualified home inspector, and a knowledgeable mortgage broker.
When it comes to investment properties, working with a real estate agent can be incredibly helpful. They can provide guidance on things like how much to offer for a property or how to price it correctly for sale. They can also give you inside tips on important factors like whether the property is located in a good school district or neighborhood.
A good property manager can save an investor a great deal of time and hassle, especially if the investor has multiple properties to keep tabs on. In addition to taking care of the day-to-day tasks of running a rental property, a competent property manager can also help to screen potential tenants, handle evictions, and coordinate emergency repairs. Perhaps most importantly, a property manager can often increase the bottom line by making sure that rent is paid on time and late fees are collected.