Don’t Fall Into These Common Pitfalls For Your First Investment Property
What does one do with one’s money these days? Saving is an option, sure, and it’s certainly something that we should all be doing. But in today’s financial climate, the anaemic interest rates offered by many high street banks make it hard to grow your money.
Perhaps we could try our hand at the stock market? Or Forex? Or cryptocurrency? While a well-balanced stock portfolio can offer opportunities for monetary growth, it’s an inherently risky business that requires a great deal of homework to become profitable. If you’re hoping to grow your money while insulating yourself from risk as much as possible, it’s fair to say that real estate is still the safest place to put your money.
However, even real estate is far from risk free. If you have your eyes on investment property, you must box clever to give yourself the best possible chance of growing the return on your investment while insulating yourself from risk.
Here are some commonly encountered pitfalls that many investors encounter of which you will need to steer clear to grow your money…
Using substandard labor or materials when renovating
An investment property is just like any other business. You must walk a fine line between keeping your overhead costs manageable and investing sufficiently in the property to ensure consistent profits.
Thus, if you have chosen a property in need of renovation, this represents an excellent opportunity for healthy returns, but don’t get into the habit of cutting costs on your renovation using substandard materials and labor.
Invest in suitable quality materials, from good quality piping to good quality flooring. Sure, you may endure slightly more significant overheads, but your property will be less likely to require expensive repairs further down the line.
Choosing a listing price based on your needs
You’ve likely done the math. You know how much your property will need to make every month to break even and how much it will cost to turn a profit. Just be wary of choosing a listing price based on what you need the property to make rather than the price of similar properties in the locality and tenant demand in your chosen area.
Of course, listing too low can inhibit your propensity for growth, but listing too high can leave you with a property that lies vacant for months and that’s something that no landlord needs!
Rushing tenants in
Your property represents a substantial investment, and in your zeal to ensure that it’s occupied as quickly as possible, don’t fall into the trap of filling it with the wrong people just for the sake of filling it.
Remember that an interview with your tenants is not sufficient grounds upon which to make a decision. You should also ensure that your prospective tenants pass background checks before being granted access to the property. You may encounter a momentary loss while waiting for the paperwork to go through, but you will take a considerable step towards insulating yourself from risk.
Being a great landlord is finding the balance between your own need to grow your investment and the ongoing needs of your tenants.