Have you thought about buying an investment property? If so, you may be just beginning your research phase to determine what to buy, where, and when. Over the years, working with investors, we’ve learned a few of the common mistakes made. If you’re thinking about entering the investment market, we have a few suggestions to help avoid any potential mistakes.
Not Knowing Your Objectives
Investor Mistakes #1 – Before you even start buying an investment property, you need to know the goals of what you want to accomplish. Understand your “why”, as well as the timeframe. What is the long-term implication of this investment? Is it for retirement? Is it to sell again in the future? Have a plan before you buy your first house to save yourself stress later on.
Letting Emotions Take Over
Investor Mistakes #2 – Have you bought a home of your own? Do you remember that process? Homebuyers frequently make decisions based on emotion, which can make a lot of sense for a home they will live in. But when you let emotions take over your decision to buy an investment property, you start to blur the lines between business and personal. Consider this purchase based on your goals.
Too Fast or Too Slow
Investor Mistakes #3 – As with any decision, you can take it either too fast or too slow. There is a sweet spot right in the middle that’s the perfect time to move. With an investment property, you need to find that place where the entire process makes the most sense. If you overthink the purchase, you may find yourself missing out on great opportunities. If you go too fast, you may end up with a property that doesn’t match your long-term goals.
Not Doing Due Diligence
Investor Mistakes #4 – This comes down to doing your research. Before you buy a property, you need to know where to buy, understand your financing, and how to manage the property once you own it. It’s helpful to work out the numbers based on 2-year cash flow and conduct your research into the area to see if it will work for your plans.
Self-Managing the Property
Investor Mistakes #5 – We also have a lot of problems with new investors wanting to save money by managing the property on their own. If you’ve never handled this type of thing, it can quickly become overwhelming and eat into every ounce of profit you could conceivably make on the investment. Hiring a professional property management company will be well worth the additional investment.
Getting the Wrong Financing
Finally, we can’t stress enough that the right financing will make all the difference for your experience as an investor. It isn’t just about getting the lowest interest rate. There are a lot of factors that will come into play and every situation will be unique. Talking with an experienced independent mortgage lender is the best way to kick off the process.
If you want to take the first step to buy an investment property, call Zachery Adam at GoPrime Mortgage in West Asheville today.