From retirement accounts and traditional savings to cryptocurrency and precious metals, there are many ways to invest your money for the future. Some options offer better returns than others, so knowing where to put your money can become overwhelming. Whether you choose to buy and flip or rent out a property, real estate can be a smart investment. If you are planning to buy your first investment property, here are a few common mistakes to avoid.
Expecting Too Much
First and foremost, it is important to remember you will not get rich on your initial investment property. Recent studies are showing most investors are seeing an average return of 9 percent on rental properties.
Buying a property, whether to fix up and resell or rent out for a period of time, will most likely require you to make repairs and updates or maintain and manage to ensure your renters are content. Because you will need money, time, and energy, your return on investment will take some time to earn.
Set realistic goals for yourself, which will prevent you from expecting too much of a return on your first investment property.
Another common mistake that many investors make is skipping the inspection of the property before buying. It is important to remember you are not only buying a potential return or ongoing cash flow if you choose to rent out the property. Be sure to the potential risk of buying a property when you are making your first investment.
Even if you have knowledge and experience in real estate and construction, invest in a professional inspection of the property. During this inspection, a licensed professional will be able to determine if there are any issues with the roof, plumbing, septic, HVAC, windows, and electrical systems.
Considering repairs and replacements can be time-consuming and expensive, paying for an inspection will be a worthwhile investment.
Making the Wrong Updates
Once you purchase a property, you may be overly excited to make updates that will allow you to resell or rent out at a profit. Unfortunately, making updates that are not actually necessary will cut into your actual return on investment.
Focus on curb appeal to get started because it will make the property more attractive to potential buyers and renters. A fresh coat of paint on the front door and shutters and healthy landscaping will make the home appear more valuable without spending a lot of time or money.
Replacing flooring only if necessary, but you do not need to invest in expensive hardwoods or tile. Fresh carpet or laminate flooring will enhance the look of your property without a large expense. If you must replace appliances, avoid luxury models that are too costly.
Investing in real estate is a great decision, but you must be smart when you make your first purchase. By avoiding these common mistakes, your first investment property will offer you a decent ROI. Contact a company, like White Glove Building Inspections, Inc , for more help.