Although real estate investments can prove highly profitable, this doesn’t mean that every property you come across is going to bolster your finances. In fact, some real estate investments can prove financially ruinous.
Given how much capital is at stake with the average real estate investment, it’s in every investor’s best interest to ensure that any property they’re thinking about purchasing is a safe buy.
Here Are 4 Prime Steps Help You To Avoid Making Unprofitable Real Estate Investments:
If you’re new to the real estate game and are looking to avoid unprofitable investments, take care to heed the following pointers.
1. Consult With Seasoned Experts
Advice from people who have firsthand experience with investing in real estate can prove invaluable to fledgling investors. As such, any friends, family members, neighbors, coworkers, or casual acquaintances with experience in real estate should be consulted in advance of your first investment.
In addition, it’s always a good idea to seek advice from highly-rated real estate investment companies. The right company will be able to provide you with a plethora of insightful knowledge regarding profitable locations, what to look for in an investment property and how to add value to real estate.
2. Do Location Research
No matter how much an investment property has to offer, its location stands to inhibit its ability to produce the desired returns. So, when seeking out potential investment properties, make a point of paying just as much attention to the location as the property itself.
To start with, you’ll need to research local property values, rental rates, population growth, growth projections, and median income. These factors will provide you with a solid understanding of how desirable an area is and how much of a return you’re likely to see on your investment.
Location research can also prevent you from overpaying for an investment property. For example, if similar properties in the area are selling for far less than the seller’s asking price, you may be well within your rights to request an explanation and/or a decrease in price.
3. Work With A Certified Home Inspector
For numerous reasons, every investment property you purchase should be subjected to a pre-purchase inspection from a certified home inspector. For one thing, you may not be able to purchase the best home insurance in the absence of a professional inspection.
Secondly, pre-purchase inspections serve to make buyers aware of a wide variety of problems, thereby ensuring that they’re able to make informed investment decisions. Even if you’ve personally done multiple walkthroughs of a property, it’s important to understand that this is not a suitable alternative to working with a certified home inspector.
A pre-purchase inspection can also provide you with additional bargaining power. For instance, if an inspector discovers issues with the property that you weren’t previously aware of, you’ll have solid footing to request that the seller deduct the cost of fixing said issues from the asking price.
No matter how eager you are for a deal to proceed, you should never allow yourself to be talked out of a pre-purchase inspection. In fact, any seller who attempts to dissuade you from having the property inspected should be regarded with suspicion, as this may indicate an active effort to conceal certain issues with the property.
Should a seller try to insist that an inspection not take place, make it clear that your interest in the property is contingent upon the results of a professional inspection?
4. Work With Licensed Contractors
When making repairs or renovations to your first investment property, you should work exclusively with contractors who are fully licensed and insured.
Doing business with unlicensed contractors may seem like an effective way to save money, but it may wind up costing you a lot more than you ever stood to save – especially if a contractor becomes injured while in your employ, refuses to stand by their work or simply walks away from an incomplete job.
Not every real estate investment opportunity that catches your eye is going to be a slam dunk. Even opportunities that seem like sure things on the surface often wind up proving far less profitable than anticipated.
As such, you’d be wise to exercise discernment when it comes to real estate investments, especially ones that require a tremendous amount of capital. Fortunately, reducing the risks associated with such investments doesn’t have to be a difficult undertaking – particularly if you’re equipped with the tips outlined above.