Buying a property to rent is a great investment idea. Although it has a large initial cost, it is very rewarding in the long run. However, the investor has to do the right things. Just before you venture into this business opportunity, other newbies in the market have done some mistakes that you must avoid.
Common mistakes that starter investors make
1. Failure to research about the property and the market
Before you consider investing in any property, you need to know the basics about the market value of the property. This is very important as it will help you when you negotiate the price. Study a number of properties in the areas you want to invest in and compare the prices. It might seem a bit involving, but it is the only way you will strike a good deal. It will only take you some little time to gather all the information you require and in the long run, it will save you money.
2. Most buyers think selling agents are on their side
You should know that the selling agent is not working for you but for the buyer. Hence, you are on your own, in striking a favorable deal. All they will do is to furnish you with all the information you will need about the property and persuade you into buying the property. Your needs, budget and tastes, are never their priority. Therefore, the only way you can succeed in this endeavor is by doing your own research and making sure that you ask the appropriate questions. This way, you will be able to get the information that you need to make an informed decision, on the rental property in question.
3. Embarking on the search without a finance approval
It is disappointing to invest all your time searching for a particular property and just when you are about to initiate the transaction, you are told you cannot continue. It is important to evaluate your borrowing capability before you start looking for a rental property. It is better to be safer than sorry. Simply seek for the financial approval and then proceed to search for the property. This will reduce the search to a manageable number of properties from where you can choose.
4. Stay within your financial boundaries
We have seen many landlords get disappointed because they committed to financial agreements that were beyond their means. Ensure that you learn from their mistakes. To avoid such frustrations, be sure that your repayments are not more than 25% of your household net income. Secondly, avoid borrowing more than 80% of your property value.
5. Avoiding conducting inspections
It is natural to feel elated once you find your dream rental property. For most people, they want to get the house units full as fast as possible and start receiving rental income. However, it is wise to do some inspections to ensure your property is in good condition. Faulty wiring, termite infestations and sub-standard renovations are some of the issues you should inspect before paying for the property. The only way to succeed with rental properties as a landlord is to avoid making the same mistakes that others before you have made.
The mistakes outlined in this article are the most common that people make. If you can avoid them, you should make good progress even if you are a newbie investor.
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