Investing in rental properties can make you a lot of money in the long run - but only if you do it right! Here are some of the biggest mistakes you can make when starting the journey into buying rental properties.
1. Not getting a home inspection before you buy
A home might look perfectly ok to the untrained eye, but don’t forget that your investment isn’t just those four walls. It’s the plumbing, electrical, foundation and other important elements that you need to get a professional to assess before you commit.
2. Not properly calculating to cost vs. revenue
A deal may seem incredible, and you feel like you need to jump on it. We get it. BUT don’t do yourself a disservice and sign on the dotted line without doing your homework. You need a qualified realtor to look at the market and the comps in that neighborhood to make sure that you can charge the rent you need to make it a worthwhile investment.
3. Not looking deeper at the fine print
So if you’ve taken our advice and checked to make sure you can charge enough rent to make it worth it, now it’s time to dig into the nitty gritty. Is the property in a flood zone or other problem area? Does the house have permit issues? Why is the homeowner selling? Are there any problems with the neighborhood? Our #3 mistake may sound a lot like our #2 mistake, but that’s because doing your research is so important when making a big financial decision like this one.
4. Not hiring a professional
This isn’t a television you’re buying. There are a lot of legal and financial ramifications when you make a mistake in real estate investing, so be smart and surround yourself with people who are smarter. Get yourself a savvy realtor, a seasoned home inspector, a talented handyman and an insurance representative. There may be times to DIY, but buying and maintaining a rental property is not one of them.
5. Not understanding you won’t “get rich quick”
Buying real estate and renting properties is a great opportunity in the long term to make money! But don’t expect to become a millionaire as soon as you buy your first property. Real estate investing is hard work, and you have to be willing to put in the time and effort in order for it to earn you the most money.