More than 6 million real estate units were sold in the last month alone, for a median price of around $350,000. You're probably itching to join this market and start investing for yourself, but hold on just a moment!
Plenty of new real estate investors get in over their heads and wind up losing a lot of money. How can you avoid making real estate investing mistakes that will cost you big? Read about these top five beginner mistakes to get some real estate tips on what not to do!
Not Researching Enough
Research is the key with any investment, but it's even more crucial with real estate. If you start buying investments blind, with no foresight, planning, or knowledge, you're setting yourself up for failure.
You might think that you've done enough research if you read some articles and spent a little bit of time reading about properties online, but that's not enough! Really dive in, get as much knowledge as you can, and always be learning. Even if you think you know a lot, the markets are changing, and it's always good to keep learning to keep ahead of the curve.
Many of the following mistakes on this list can be traced back to a lack of research. Do your due diligence the first time, and you'll find yourself in a much better position!
Going It Alone
You may have some skills, maybe with property marketing and property accounting, or maybe even with home maintenance and construction. But don't fall into the trap of thinking you can do it all!
It's important to reach out to experts and get feedback, advice, and knowledge when it comes to real estate. This is true both for general topics, as well as specific issues with properties you're looking to buy. Have professionals perform your rental inspections, and they'll be able to pinpoint what kind of work you need to do.
Paying Too Much
It can be tempting to spring for a mortgage on a hot new property, but many people wind up overpaying for their properties. Don't trust your gut, do some research on the actual rental value!
At the moment, the real estate market in Denver is booming. But the future trends may change. You have to be very careful to find out exactly what your property is worth, what you can make if you rent it out, and how much you can sell it for down the road.
You'll make money from rent collection, but how much? Will it be enough for you to break even or make a profit? These are important to figure out before you sign the paperwork!
Underestimating Your Costs
Of all the landlord tips to remember, this is one of the most important: properties need a lot of work. As mentioned above, it's a good idea to have your building inspected before you buy it so that you can avoid unexpected repair costs.
Even so, you'll be paying for more than just the mortgage on the property. Taxes, utilities, and appliances are just some of the everyday costs for landlords, and they can add up quickly! Don't forget to include your estimates for those costs when you buy a property, or you might find your profits eaten up by electricity bills and appliance repairs.
Buying the Wrong Property
Finally, remember the adage about properties: location, location, location. You need to know the area you're buying real estate in, or else you might end up buying a property that doesn't fit. Many new buyers make this mistake and end up with a property that would be worth far more in a different location.
Leasing cheap housing to college students is great, but you'll struggle if you're trying to sell cheap properties to Denver tenants with large families. Likewise, you're not going to have much success selling upscale mansions to working-class families next to a business district. And don't forget the importance of tenant screening to make sure your tenants fit well with your property!
Learn More About Real Estate Investing!
While real estate investing can be tricky, you don't have to figure it all out on your own. We're eager to help you succeed on this fulfilling journey!
So, if you have any questions about real estate, or want more real estate investing tips, contact us! We'd be happy to help you figure out exactly what steps you need to take to start making your own investments.