Are you planning to try your hand at an investment property? If you’re investing in rental properties – avoiding common mistakes is a must. There are many mistakes you might make as a first-time property investor. Such errors can cost you effort, time, and money.
To assist you, this post will cover several real estate investing blunders to avoid as well as what you should do instead.
1. Failing to plan in advance
It’s hard to fathom making such a major financial commitment without first doing thorough research and making careful preparations. We suggest you create a solid plan before making a real estate investment. According to a census, there is a chance that Australian house prices will fall drastically.
So, this is the perfect time for investing in property.
A lot of planning and consideration needs to go into your first rental property purchase. It would be excellent if you considered both your preferences and the cost of the home.
Additionally, keep in mind the future maintenance costs and the property’s growth potential. Watch out for capital gains, capital growths, capital gains tax, and so on.
Don’t rush into a decision. You should always attend a proper property inspection.
2. Not consulting the experts
When putting money into your first investment property, you should consult experts or property managers for second opinions. For example, if you need help understanding cash flow, property loans, or capital tax benefits, an accountant can help you.
Additionally, a real estate agent can help you through your issues with property inspection. Similarly, if you are concerned about property loan repayments, a mortgage broker, like Soho Home Loans, will be able to help you.
If you are investing in multiple rental properties, having a property manager will be a good idea to help you through the process.
You can also consult Australian property tax experts or financial planners. As part of your investment strategy, they will assist you in building a diversified portfolio of real estate holdings.
3. Investing in the wrong property
As a first-time investor, when you have multiple rental properties to choose from, there is a chance you may end up investing in the wrong property. To help you avoid typical problems that arise while buying rental property, here are some suggestions to keep in mind.
Always start by giving the building a thorough inspection which includes a building and pest report. Does the investment property require a lot of maintenance? Is it musty, or does it have broken floors, wall fissures, a lack of ventilation, or something else wrong?
If yes, you should think twice before investing in such properties. You should always think like a tenant when investing in rental properties; for instance, if you buy a house near a college, your tenants will be students on a tight budget, not retirees.
So, you should always check local market trends. Also, learn about landlord-tenant laws, zoning requirements, and fair housing laws. Such factors will affect your investment goals.
4. Not doing proper research
When you are investing for the first time in rental properties, you should ALWAYS do proper research. Before investing in any rental property, you should know the prevailing property rates of the locations. Along with that, you should research the land value, property taxes, and civic amenities.
Do you have a proper property financing plan? Investing in real estate requires careful consideration of many different financial factors.
Additionally, you should estimate how much you may expect to make through rent each year, also known as your rental yield.
What about the location? What are the nearby facilities available in a locality? It would be in your best interest to inquire extensively not only about the house itself, but also about the community it is situated in. A family moving into your house would need hospitals, family parks, clinics, local schools, or grocery stores nearby.
You also require a thorough analysis of the property market conditions. Without a sufficient understanding of the location, you may be duped by agents and brokers.
5. Not having a right insurance policy plan
Insurance is a must when dealing with a rental property. It’s important for those who invest in property to think about getting good insurance coverage. If you have the right insurance, your home and belongings will be protected in the event of a flood, blizzard, or other natural disasters.
The failure to obtain enough insurance or the acquisition of insurance that is not specifically tailored to the needs of the buyer are two of the most common blunders made by buyers. Hence, before investing in a rental property, it’s important to think through insurance and other concerns.
Wrapping up on rental properties – avoiding common mistakes
Keep in mind that research is one of the most important preparations you can make. This includes browsing Soho’s property finance section for insights, tips and tricks.
Take your time making this big financial decision and speak to property experts when you can.
