You want to invest in a sector of activity that will increase your income so that you can live in peace and safe from need. Real estate is a great idea. However, it can become a nightmare if you do not know how to do it. Discover here ten mistakes that you will have to avoid during the first real estate investment.
Do not do enough research
It is typical for beginners to make this mistake. As a buyer, you should take the time to look for what you want and avoid making a hasty choice. Remember, you do not buy to lose money, but rather to make money. If you come across an apartment that charms you, nothing prevents you from doing additional research and comparisons to see something better elsewhere.
Buy in the wrong place
Three rules govern the real estate universe, and among these is one of the most important; the location. It would be best to look for a place where the economic sector is well developed. Find an area or region that has a good geographic and economic location. An economically dead area will not attract anyone. A good idea would be to buy an apartment in the capital or a place close to schools, health centers, etc.
Buying a property that does not correspond to the use
Before you get a property, you consider some factors, including what you intend to make this property. Indeed, it would be completely useless for you to buy a property that does not suit what you are looking for, no matter how beautiful or charming it is. This brings us back to error 10. So, to avoid making this mistake, it is once again important to do thorough research.
Invest in the new
You do not have to invest in something new, especially if you’re just starting. This is simply because what is new is usually much more expensive! Also, as an investor, you should spend less to earn more. Instead of buying new, a good idea would be to buy an old property, not obsolete, and renovate it. You can save money!
Pay too much
Others might make the mistake of misjudging the good and end up paying too much! Do not be of these. Be sure to take your time and do a good market analysis to find the best prices. You can read the sales announcements or ask for information from a real estate agent.
Do not sufficiently calculate
When it comes to real estate investing, it’s all about numbers, and if you decide to buy something, the only thing you need to know is how to get a great return on your investment. To make the proper calculations for a home, you need to know the purchase price and related costs, the potential rent, the amount of any work to be done, the various expenses, etc. All of this will help you determine if the property you intend to buy is worth it.
Make a bad estimate of cash flow
One of the most important things to consider if you want to put the property up for rent is cash flow. This is the amount of money you have left at the end of each month after all expenses have been spent. Then, Monthly Cash Flow = Monthly Revenues (Rents) – Monthly Expenses. It is vital that you properly study the cash flow of your investment before you even buy it. Negative cash flow = real estate suicide.
If you want to stay in the field and continue to enjoy the benefits of your property, you will need to have cash reserves. You must be ready to face unforeseen circumstances, including repairs, maintenance costs, etc. If you are not ready for these situations, you may end up in a delicate position. On the other hand, if you have enough reserves, you will handle the unexpected without any problem.
Underestimating the price of renovations
While the cost of renovations is quite difficult to estimate, if you make the mistake of underestimating it, you could end up in a bad situation. To avoid making these mistakes, it would be better to use a building expert(companies cost too much) before buying a house. The latter will be able to detect all the building defects so that you know exactly how much you will have to spend.
Do not select tenants
Once your home is ready for rent, all you have to do is find good tenants. A good tenant is one who knows how to take care of the house, who stays a long time, and especially who regularly pays his rent. So, discuss it with each of your rental candidates, and determine who is worth it.
What to remember?
If you make an effort to avoid the ten mistakes above, your first real estate investment will be a success!About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.