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10 Costly Mistakes to Avoid as a New Real Estate Investor -What did he or she pay for the property and when? -What’s the motivation of the property owner selling? -If you are investing in an unfamiliar area, are there any problem areas in the vicinity? Before acquiring an investment property, you will need to do a lot of background research to make a wise decision. Here are few steps every new real estate investor and expert alike, should take when considering a potential investment property: Learn the lay of the land. If you don’t know much about the town or city your target property is in, there’s no better place to start than to get in the car and take a drive. It sounds obvious, but investors frequently make poor investment choices by mistaking the area their investment property is in to be just like another community they are familiar with. By driving around, you can learn the access routes to the highway and get a sense of the traffic. You can also see if there is an adequate town center, accessible public transportation, good shopping, or other factors important to your potential renter or buyer. Does the area appeal to you and do the nearby properties look well maintained? If you don’t like what you’re seeing, chances are that a renter or future buyer of the property won’t either. 18 10 Costly Mistakes to Avoid as a New Real Estate Investor
10 Costly Mistakes to Avoid as a New Real Estate Investor Do some on-the-ground research. Driving around is fine, but to thoroughly get a feel for the area, you’ve got to explore by foot. Go in local stores and restaurants and talk with the managers about what it’s like to do business in the community and/or live there. Call your friends or other people you know who live or work nearby and get their thoughts on the area. You’ll be surprised how much people will tell you. Hit the city hall and find out if there’s any development going on in the community. Understanding local development plans, and if people and businesses are moving in our out of town, can give you a gut check on the current property inventory that exists and the future market potential. Run a sales comparison. Before you even work with a real estate broker, you can find out what properties have recently sold in the area that match up with the size and amenities of the property you’re considering buying. A simple internet search will allow you to pull up sold properties within a particular city. You can also ask your real estate broker to produce a list of more specific, comparable properties in the area. Knowing how much an investment property is worth will help you gauge its value and determine potential growth. Learn market rents. If you’re going to rent out a residential property, know the true rent potential before you buy it. Your real estate broker can help identify this information, as well as provide comparable sales data. For more information on determining the financial implications of renting out an investment property, research the area rental amount average. Check out the local county recorder’s office for the deed and mortgage history. Find out the current mortgage and last sale price of your target property, and see if there are any liens on the property. These are all public records, most of which can be found online. Knowing this information will help you understand your negotiation boundaries for buying the property, and the price the sellers will be willing to accept. 19 10 Costly Mistakes to Avoid as a New Real Estate Investor
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