To some people, purchasing a real estate property is not just about finding the perfect home… it’s also about doing business and making money from it. The property investor is always looking for investment opportunities that can give high, big gains.
For many years, it has been the practice of property investors to purchase properties and have then rented out by tenants. This is also called land lording. As the landlord, you will be responsible for paying the maintenance costs, taxes, and mortgage. Such expenses are covered by the monthly rental income that the landlord receives. To ensure loyal tenants, the property investor should charge reasonable rent because over time, the property will appreciate in value and you would have already paid off the mortgage. Another option would be investment groups. This is a great option for those who want to get rental properties but don’t want to be in the dirty business. The property investor can own one or more units but then a certain company manages all the units. You no longer have to attend to maintenance, interviews, advertising, and other tasks. The company that manages the units receives a certain percentage from the monthly rents.
When you are starting out as a property investor, the whole process can seem complicated and daunting. As a newbie property investor, there is that excitement of embarking on a new adventure coupled with the anxiety of not knowing the ups and downs of the trade. To be a successful property investor means setting up goals and deadlines and checking your progress on a regular basis. A smart property investor will invest in educating himself with the current trends in the property market to stay abreast of the competition. He will read magazines and blogs on property investment and attend conferences and seminars to brush up his skills and knowledge.
There are some common mistakes which new property investors make:
1) Many property investors pay too much for a property. A wise investor will make money even while buying the property and not only when they sell it. They will increase the value of the property by doing renovations and refurbishments and then sell it at a higher price.
2) Many investors buy too many properties together and spread themselves too thin. It is important to first understand the entire process of purchase end to end and then replicating this process in other real estate deals. This way there will be less mistakes and the investor will be able to deal with each property without getting overwhelmed.
3) Not having a proper management system to keep track of all their properties. Every property investor should have a management system to keep a record of their investments, whereby they know how much money is coming in and out for mortgages, tax payments etc.
4) Not doing proper research and having an action plan ready. A property investor needs to know the market thoroughly and know the movements in the market condition and have an action plan ready to meet the changes in the market condition.
5) Not doing any reinvestment in the purchased property. A property needs renovation and repairs just like a vehicle and if left unattended for too long will not give you good returns on your investment. If your property is left neglected, it can considerably reduce the value of your investment.
An intelligent property investor will have a carefully planned investment strategy. He will have his goals and deadlines clear in his mind and will make it his job to do thorough research to continually increase his knowledge of property market.