The business of purchasing an investment property can mostly be fun and exciting for new investors. However, there are lots of things that goes into buying an investment property. Buying an investment property is a huge investment and so requires more from you than fun and excitement. It is not just about selecting the most beautiful or the biggest property. It requires your time and attention, reason why investors are separated into classes; successful and struggling. To help you make the right choice when buying an investment property, at InvestWay Group, we have compiled some basic mistakes real estate investors make. Contact the Investway Group now to get the best investment assistance in Tampa, Florida.
Common Mistakes Made When Buying an Investment Property
Negligence of Due Diligence: Before buying an investment property, you need to investigate the actual worth, the pros and cons of the property that you are planning to buy. When you carry out due diligence on the process, it helps you know what similar properties are worth, and their price tags. Due diligence helps you know the benefits of buying from a particular neighborhood, and helps you with profit projection. Without due diligence, you can never know the property’s market value, which is tantamount to a bad purchase.
Streamlined Options: When buying an investment property, there are countless options before you. You need to look at the different investment properties available in the area of interest before committing to one. For maximum success in real estate investing, you must not rely on just one source of information. Always know that a realtor’s major goal is to close a deal, and most of them would say anything just to get you to buy. Once you buy, they get their profit, and care less about your investment pitfalls. Realtors are mostly an excellent source of information, however, it is better to avoid taking financial advice from them, and seeking out which deal is better or good from them.
High bid at auctions: When buying an investment property, bidding war is a bad pointer. If you come in contact with an investment property another buyer is highly interested in, it is better not to get too involved. Getting into a bidding war makes you offer an unreasonable price for the property without due diligence; knowing the property’s worth.
Investing in a depreciating market: When buying an investment property, don’t be over excited that you are getting a ridiculously low price – it could mean doom. Never buy an investment property in a depreciating market where the prices are falling. When you buy, you do so in hope of an appreciation, not a depreciation. Your calculations for a rise mostly won’t work, so it is better to stay off.
Not having a sizable deposit: When buying an investment property, a big deposit saved up helps you to buy the choicest property and not just what you can afford. It is better to buy a suitable property that fits your investment goals, rather than being forced to buy because it is all you can financially afford.
Emotional mix: You need to see a property as an investment that can yield profit, as an investor. Never buy an investment property because of any emotional attachment. Getting attached emotionally to a property will cause you to overpay, with an increased chance of completing a bad deal.
Failure to consider other expenses: In the process of buying an investment property, it is a costly mistake to think that all you will be paying for is the property’s purchase price. There are many other expenses associated with buying an investment property, which you must consider in order to end up with a good deal.
Negative Cash flow: Maintaining a healthy cash flow position is key as an investor. A positive cash flow property makes you money, with little or no contribution on your part. This helps you increase your investment in the future, and helps drive your desired investment goals.
Buying an investment property can’t make you rich overnight, however it can make you rich in due time when all these mistakes are avoided. It’s all about educating yourself, listing your goals, creating a solid plan, doing your research, investing, and repeating the process.
To ease the process and get great deals, it is better to work with an investment property firm like the Investway Group in Tampa, Florida. Get started here!