Lately we have been getting a-lot of questions about Investing in Real Estate. We believe it is partially due to the large number of short sales closing but also because Spokane is experiencing a sellers market. Right now prices are low enough that anyone with a reasonable credit score and a full time job can purchase an investment property. However there are several mistakes that first time investors make that can be easily avoided. Here are 5 mistakes first time real-estate investor makes.
1. Being Underfunded. The math seems simple, I will buy a property for X my mortgage payment will be XYZ, I’ll increase it by 20% and Ill be paying my mortgage and making a little money on the side. If properly executed this can be true, but there are several costs to take into consideration when setting up an investment property. Factors such as closing costs, insurance, maintenance, and property taxes can eat away at profits very quickly. Make sure to talk to a professional and work to set up a budget that covers contingencies including setting up a emergency budget for unexpected costs.
2. Underestimating The Time Commitment. Being a landlord can be very time consuming. If you do not set up a clear system for working with your tenants you may find yourself living on your phone. Credit checks, rental contracts and maintenance can chip away at valuable time and resources. Consider enlisting the help of a property management company. Property management companies can provide day-to-day managers, contracts, background checks and trusted service providers to make sure that you investment is taken care of while you are looking for your next investment.
3. Knowing The Neighborhood. It can be tempting to buy a home in a not so favorable neighborhood because the price is right, just remember that someone actually has to want to live in your house for you to make money. Factors such as proximity to transportation, employment, great schools and public parks can improve the quality of the type of tenant that rents your property. It is important to look at the marketability of your property, does your property have curb appeal, what sets aside from the hundreds of other rental properties In Spokane? If your costs are fixed (which they should be if you have a proper budget) then you need to differentiate it by amenities and curb appeal and not price.
4. Miscalculating Improvement Costs. Once you have received professional estimates double their estimate both in time and cost. Unforeseen expenses always make their way into the best-planned projects. Being prepared is one of your best assets when starting your first project. After doubling your costs if you can still make money on the investment property then it is likely a good investment.
5. Not Using A Professional. Professional Realtors can save you time and money when looking for investment properties. Local Realtors not only know specific neighborhoods but they deal with other investors, vendors, and lenders on a daily basis. The professionals at Synergy Properties know the Spokane local Real-Estate market and have become experts at serving the Spokane community. Give us your your criteria and we will find a home for you. For more information contact us at (509) 624-4400 or visit us on the web.
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