Top 4 Mistakes New Real Estate Investors Make When They Buy a Rental Property

If you’re thinking about investing in real estate for rental properties or you want to add to your current properties, you want to be smart about the choices you make.

New investors have a tendency to make some common mistakes, and you’ll be ahead of the game if you learn from others’ mistakes.

1. Not Recognizing the Difference Between Cheap and Inexpensive

Most real estate investors look for inexpensive properties when purchasing them for rentals. However, the newbie often confuses cheap with inexpensive.

A property listed below market value is a good buy if it has strong potential.

On the other hand, it’s just cheap if there’s a lot of work involved to get it ready to rent out or if it’s located in a bad neighborhood or a high-crime area.

A property that will be difficult to rent can turn into an expensive purchase even if the price was good.

2. Opting Out of an Inspection

While you may not actually choose to forego the inspection, you may not be part of the actual process.

Even if you aren’t mechanically inclined, it’s still a good idea to be around when the inspector looks at the property you’re buying.

This is your opportunity to ask questions about all of the areas he’s inspecting.

While you might overlook a few issues with your own home, you don’t want to end up sinking a lot of money into repairs for a rental property right away.

You can ask the inspector about costs and options for repairs to help you determine if this property is a solid investment or one you should walk away from.

3. Buying in the Wrong Neighborhood

You will want to think ahead when you make an investment in real estate.

Think about what the neighborhood will look like in five or ten years. If it’s an up-and-coming area, even if it looks a bit neglected now, it will be a solid investment, especially if you decide to sell.

On the other hand, if the area is continuing to fall down, you may end up with a property no one will rent and you can’t sell.

4. Not Knowing the Rental Potential

Not all good properties make good rental investments.

You have to think of the area and how much rent you can command for your property. A downtown property close to the business district and nightlife will likely draw in plenty of renters at a good price.

On the flip side of the coin, a small house in a suburban neighborhood with families may not bring in too many renters.

You may end up with high turnover if you do manage to rent it out, even more so if the neighbors have a negative attitude towards rental properties.

It’s important to do a rent survey before you select a property to buy and consider the neighborhood for an indication of how easy it will be to find renters.

When looking at investment properties to add to your rental income, consider all of these mistakes that are common with new investors.

Avoid them by thinking through all aspects of the property you’re purchasing.

Learn how to identify a good buy for rental properties and avoid getting stuck with a property that fails to live up to its potential.

Posted on Mar 23, 2016


The Landlord Tenant Board: What it is and When it is Needed

Many times, there are issues between a landlord and a tenant that need to be resolved but are failed to do so, because both parties have gone too far with their actions, and have retaliated in the... More

How to Create a Residential Lease Agreement

Where there is a landlord, there will also be a tenant, and it is no surprise that these two parties can only work together once there is some sort of agreement, contract or a binding deal in place.... More

The Best Sites for Rental and Lease Agreement Templates

Many landlords find it difficult to write and draft a lease agreement. Since every State has its own general template, it can also be difficult to make sure your lease agreement meets all the criteria... More

Landlord Obligations: The Responsibilities of a Landlord

Becoming a landlord is a major deal and no one can simply get up and think, “well, yes I think I should be a landlord and rent out my flat.” If you are thinking that you would like to be a landlord,... More

The Best Landlord Associations for Landlords to Join

If you’re a landlord and want to manage your business in a better way, you should endeavor to get in touch with those industry experts who have the experience and the skills to help you do it. This is... More

The Best Landlord Forums

Landlords and aspiring landlords, do not become as such, without guidance and advice. There is a lot that goes into being a landlord nowadays; in fact, there is so much to learn that it often confuses... More

The Biggest Landlord Problems and How to Fix Them

Renting out an apartment or a house can become a constant revenue source for landlords, but at the same time, it gives rise to several problems. It is a fact that high standards, a strict lease... More

Landlord Tenant Disputes

If you are currently thinking of becoming a landlord only because it helps you have a constant stream of income, you should think twice. It’s not that you should not consider offering your property... More

Unpaid Rent

When you talk about the most common disputes arising between landlords and tenants, nonpayment of rent has to be there in the list. People rent their properties to earn money, and when a tenant... More

Section 8 Landlord Pros and Cons

If you have ever rented a living space and have had to move many times, you’d already know how difficult it is to find decent, affordable and secure living premises. A person has to deal with the same... More