Investing in real estate just might be the ultimate in entrepreneurial adventures, especially if building financial wealth capable of remaining stable for generations is the goal. In fact, some of the today's most financially successful people have done so through their own real estate investments or by managing inherited investment properties from a parent or family member. If you are a new real estate investor wanting to build a successful portfolio of your own, the following tips can help you save money and time and shorten your path to success.
Avoid properties that will be expensive or time-consuming to renovate
Properties that are not ready for tenants to occupy are taking money out of your bank account instead of bringing money in. To help reduce the amount of time between purchasing a property and receiving the first rental payment, focus your initial investing efforts on properties that need nothing more time-consuming than cleaning or a fresh coat of paint before putting them on the rental market.
Avoid purchasing rental homes in areas with little potential
Another common mistake new investors make is purchasing rental homes solely on the basis of price, without considering the location of the home or other factors. Buying a cheap home can become an expensive mistake if the area is one in which people are moving away from due to lack of work, poorly performing schools, urban blight, or some other reason. Instead, use cost as only one factor when seeking out homes to purchase and be willing to pay more for a rental home in a better location that will be easier to rent. In most cases, new investors find that the increase in rental fees and better occupancy rates will quickly make up for the higher initial purchase price point.
Avoid the temptation to be a DIY landlord
One of the most expensive mistakes a new investor makes is trying to be a do-it-yourself landlord. When this happens, there is little time to search for the next great rental property because the landlord is constantly dealing with marketing, fielding tenant calls, handling leasing documents, and performing maintenance tasks.
One of the best ways for new investors to avoid the trap of becoming a DIY landlord is to hire a professional property management company from the beginning. An experienced property management firm can assist real estate investors with advertising and showing vacant units, collecting and disbursing rental payments, handling tenant issues and questions, preparing leasing documents, and addressing necessary maintenance and repairs. In addition, the modern screening practices used by professional property managers can help to insulate investors from non-paying or problematic tenants.