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10 Costly Mistakes to Avoid as a New Real Estate Investor Get all of the costs. In addition to the property taxes, ask your real estate broker if he/she can obtain data on the current expenses of the property, such as utilities and insurance. If it’s a commercial property this should be no problem. For a single-family home, this may be tougher, but a seller may provide this information if they know there's an eager investor looking for it. Evaluate multiple properties. You may feel that a particular property is the one, but you should look at multiple properties before making an offer. Ask your real estate broker to show you several within your price range, including properties you don’t like, so you can assess the different neighborhoods and have a better sense of your target property’s value. Obtain local statistics. Look at how the city compares with other localities in the area. How do the schools stack up? What’s the median income? Unemployment rate? What’s the population count, and is the community growing? How do the real estate taxes compare to nearby cities? All this will help you better understand the attractiveness (or lack thereof) of your target town or city over others. Don’t forget to check the official website of the city or county where the potential investment property is located; many local government websites include demographics, crime statistics, and other data. Determine property potential. Understand how the property is zoned. Can you expand it? Can you convert it to something else? What are the setback regulations from the street and bordering areas of the lot? If you have visions of developing the property, you need to know the city’s classification of the property and the limitations that come with that. If, for example, you want to alter the property’s use by turning a residential property into a commercial one, this will likely cost you in attorney fees, but a consultation with city managers is imperative in order to find out if that is a step you could even successfully take. 20 10 Costly Mistakes to Avoid as a New Real Estate Investor
10 Costly Mistakes to Avoid as a New Real Estate Investor Examine permit data. Cities, counties, and municipalities are increasingly making permit data more accessible. You may be able to find your property’s physical history online, but a trip to the local government administration building can yield results if a web search can’t. Not every community will have this on hand, but it’s nice to get it if you can. Knowing when a permit was actually pulled for a furnace installation, or a new roof, will help you determine the seller’s honesty when those matters come up during the negotiation. Discrepancies learned can result in actual dollars saved. Conduct your research on any and all of your future investments and it’ll save you a ton of heartache in the short and long term. Mistake # 4 Partnering Without a Written Agreement 21 10 Costly Mistakes to Avoid as a New Real Estate Investor
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