Millennials have shown great interest in investing in real estate in recent times. It is not difficult to fathom the reason behind this interest. Millennials love to register their name on the property ladder. They also see real estate investment as a more stable form of investment than stock markets. Millennials believe that buying a property is a good way of telling the world about their financial success. However, being inexperienced, it is common to see these young investors making some costly mistakes. Here are some of these mistakes that must be avoided to reap the actual rewards of real estate investing.
Trying to do everything themselves
Real estate investing is a teamwork that requires the skills and knowledge of many experts. When you are new to this field, you are not aware of the tricks of the trade and it is also easy to fall into traps set by others. Google may have many answers, but real estate transactions involve many legal formalities and technicalities that are far beyond the scope of Google. Also, real estate agents are privy to information and exclusive properties that never comes on to the market. Trying to carry out a transaction without taking help and advice of an experienced realtor is like taking a medicine without consulting a doctor. A realtor knows the market better and he is also vital during negotiations.
Ignoring the hidden charges
This is another common mistake committed by newbie investors when they jump on to a real estate deal without reading the fine print. These hidden costs such as repair costs and the closing charges add up to make the investment less attractive in the end. List price is not the only cost you have to bear and if you do not make an intelligent estimate of all the hidden costs, you could end up paying far more to make your investment expensive. It is important to keep in mind the cost of insurance, property taxes and all the closing costs that you are expected to pay as the buyer. If you overlook these hidden charges and buy a property based upon its list price, you could face huge disappointment by the diminished profits from your investment.
Buying a bigger property than they can afford
This is the third and most important mistake often committed by new investors. In their excitement of becoming the owner of a huge property they sign a real estate deal that is beyond their capacity. It is natural to be thrilled to pieces to see a massive property available at a less than its fair market value. But what these aspiring investors fail to see is the amount of money such a property will need for its renovation before it can start to earn rental income. These investors believe they can handle all the renovations themselves to make the property rent ready quickly and by spending least amount of money. What they do not realize is that rotting wood used in the property alone can cost thousands of dollars, leave alone carrying out major structural issues. There have been instances in the past where investors had to abandon their projects midway because of huge expenditure incurred on the renovation of the properties they purchased in their excitement.
Real estate investing can be profitable, but it requires some knowledge of the housing markets and experience of the realtors. These realtors can make a quick estimate about the profitability of a piece of real estate just by looking at its condition and location. Taking help and advice of a local, experienced realtor is the best way to avoid making these mistakes when you are a new real estate investor.
If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.
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As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
