Mistakes to Avoid When Buying Your First Rental Investment Property
Buying your first rental investment property (a house or apartment) is one of the best ways to build your wealth and expand your finances and it’s also pretty exciting. Rental investment is a sort of fiscal cushion that will not only pull you out during critical periods but is also a robust retirement plan.
Although the entire process and the end-result sound tempting, there are a few mistakes you need to avoid when buying your first-ever rental investment property.
Mistake 1: Incomplete Research
While we agree reading books and listening to podcasts are a great way to build knowledge and perspective, relying only on them and not conducting thorough research on your own is definitely not the way to start a career in real estate. You need to go out of your way and research about the property you’re about to invest in as well, as every opportunity, every experience, every challenge, and every property is different.
Mistake 2: Not Networking
Networking with others in the real estate industry is highly undermined. Although there are plenty of resources out there like podcasts, books, blogs, and websites, that you can leverage, nothing can compare to people sharing their personal experiences on how they started their journey, tips they have for newbies, their challenges and experiences, etc. Networking will help you be alert and prepared before you actually purchase a rental property.
Mistake 3: Ignoring Rental Investment Property Analysis
Property research is one of the most important things to do before you actually invest in a property. You need to analyze whether it’s beneficial to invest in this particular property or not. Here’s what you need to consider for property analysis:
- costs of owning a rental property, an appraisal, closing fees, repairs, etc
- recurring costs as property tax, insurance, property management, etc.
- comparing these costs to the rental income
- projecting the ROI you can expect to earn
Mistake 4: Overbuying Properties
If you’re a newbie investor you need to avoid buying too many properties at once, obviously because of a lack of experience at multitasking and handling properties. You need to work on things gradually, for at least a year, take one thing at a time, and once you get a good idea of what’s the process like and all aspects of owning and rental property, feel free to polish your portfolio with additional properties.
Research and investigate carefully when investing in a rental property, avoid the aforementioned mistakes and you’re all set to invest in your first rental property paving the way towards a comfortable financial future.
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