Although there are pros and cons to investing in real estate just like with any other type of investment, it is a great way to build wealth. Being a landlord is a way to get income every month and also build up your worth with the increase in the value of the property you own.
There are things that some landlords do that end up costing them money. They cut into their profit margins needlessly when they should be looking into ways to make even more money. Many of these mistakes are quite common and many first-time landlords end up committing them. In this article, we will go over several so you know what not to do when you own an investment property.
1You didn’t research the market
Where you buy your investment property is going to be the biggest factor in your success. Of course, location is very important no matter what. When buying an investment property you have to understand how much you can charge for rent. What you pay for the property will determine how much you need to charge to make money.
In other words, if you buy one of the homes for sale in Grant Pass OR without understanding the market you could pay too much and then be tempted to ask a lot for rent. If the market is not able to get you that amount then you will be paying a mortgage on a property that you can’t rent out, or you need to rent it out for less than your mortgage.
Take some time to dig around to see what the average is for rent in that area and then make sure that you are going to pay for a mortgage that allows you to make a profit. This way you never risk having an investment property that doesn’t put money in your pocket.
2You didn’t screen your tenants
The best thing that a landlord can hope for is tenants that pay on time, respect the property, and stay for the long term. Unfortunately, you have to get very lucky for that to happen. Unless you take the time and expense to properly screen your tenants. You need to be very selective about who you rent your place out to since the wrong tenant can be a nightmare that you can’t get rid of.
Invest in a program that will run a background check on prospective tenants. You should also check their credit score to make sure that they pay their bills on time.
3You ignore maintenance issues
It is very tempting to not spend any money on maintenance. It seems like an expense that cuts into your bottom line every month. However, when you ignore issues they end up becoming bigger and more expensive problems later on. Make it a point to fix things as soon as they need it. Also, remember to be doing routine maintenance on appliances or the HVAC so that they run correctly and last longer.