Avoid These Common Mistakes
When it comes to investing in real estate, there are 3 pitfalls that can impact your cash flow and ROI. We wanted to discuss these 3 points with you today :
1. Overpaying for a property
Purchasing an investment property, especially if you are a first-time property investor can be a challenge if you do not have good knowledge of the market. You must stick to your budget and make sure the numbers make sense to get the best outcome: the one that matches your overall goals. Be clear about the goal of this investment, is it to generate positive cash flow for passive income, is it a long term equity building strategy or some combination of both? It is critical to disconnect the emotional aspect and be very objective when deciding on which property to invest in; otherwise, you may end up overpaying for your investment.
Before #investing in a particular property or #multifamily, make sure you run the numbers, gather as much data as you can, build a spreadsheet and review the numbers. Be conservative in your estimations for categories like repairs and maintenance, and get solid figures for utilities, insurance, taxes and carrying costs for money borrowed. Calculate the costs for renovations to have the units made rent-ready, run a rental analysis and make sure each unit is not over-leveraged or in other words “under water”. Lastly, don’t forget to consider lost rent due to unit turnover and time on the market to rent. Without taking all the factors into consideration you could eventually find yourself in a challenging financial situation.
3. Property Management (or lack of)
Some real estate investors may be able to self-manage their properties. By doing so, you need to understand the landlord-tenant laws, tenant screening process, lease process and most of all be available for any maintenance issues day or night. The eviction process can be very costly and draining. Hiring a professional management company can bring tremendous value to your property investment experience. A #propertymanagement company not only understands the market and the industry to fully optimize your rentals but also will handle every detail from finding a qualified tenant, bill pay, rent collections, lease signing, 24/7 maintenance calls to eviction process and more. It will bring you peace of mind and will allow you to focus on your full-time job or even better search for the next property investment. Time is money.
Blackstone Group is a property management company which was created by 3 property investors. With a combined knowledge and experience of over 15 years, we make every decision with an investor mindset.
If you are interested to invest in Rhode Island or Southern Massachusetts, please feel contact us for a free consultation.