7 mistakes many new and veteran investors make when looking to secure income properties.

Are you looking at buying rental properties this year?

Here are 6 mistakes most landlords make…and you don’t have to.

I could sum up these six short but important points with two words: “Don’t wonder!”

1: Don’t “Wonder” what you should be purchasing: KNOW!

Do the research.  Don’t wonder what is best for you.  KNOW what you want.  Better than that, know what you should be buying in order to put you in the financial position that you are building toward. This is a huge step and must be the 1^st step.  It requires substantial research.  You have to be honest with yourself.  That said, when it comes to market research, ‘substantial’ doesn’t mean difficult. It doesn’t even mean that you have to do any of it yourself.  Call a Realtor or two.  Not only do they do it…but they do it all the time…for free!  Use this research to bring certainty into the process. Be sure to know what you should purchase, create a plan, and then stick to it.

• ·         Only spend the amount that makes financial sense.
• ·         Determine how much cash flow you need to make.
• ·         Never let emotion override the numbers. 

Be thorough in your internal ‘research’ as well as your market research.  Do you need your property to be local, or can it be in an area where lease prices are higher and home prices are lower?  Are you going to manage your rental(s) yourself or will you be using a property management company? Should you buy a condo?  A duplex? An older home? Is there new construction, with loan programs that provide easy AND responsible entry into the rental market? All of these questions, and dozens more, are vital to decide on BEFORE you get in your Realtor’s car to go house shopping. 

2: Don’t wonder how much should you spend: 

First, determine how much can you spend. Then determine how much you SHOULD spend. Do you have funds in reserves to update/upgrade/repair your prospective property? Do you have funds to cover months where you may have vacant properties? Find a lender near you that will sit down and discuss special loan programs?  Do you need to request a credit to cover closing costs when you write an offer? etc.

3: Don’t wonder what your prospective property will rent for:

Ask a Realtor, or a team of Realtors to draw up a lease/rental survey for the area(s) you’re looking to purchase in.  Also, and this is key, do a simple ‘rental survey’ of your own!  Often, Realtors use MLS exclusively to find rental properties for their clients.  At the time of writing this post, Oakley and Brentwood showed a combined 51 homes active on MLS.  Compare that to 181 homes for rent in the same areas on Craigslist.  Use ALL of the data you can.  It’s all relevant, and it should all be considered.

4: Don’t “Wonder” if the information you have on prospective homes is accurate

The internet is full of sites posting real estate listings online, but is that information accurate? Virtually all of the information you’ll find online is fantastic.  Very little of it is inaccurate, however, I have seen, and continue to see gross miss information on several internet real estates.  Beyond the miss information is the fact that the asking price of a property is based on countless variables.  If you don’t know those variables intimately you may end up heart-broken or worse….broke!

Each of these sites pulls data from the regional Multiple Listing Service; MLS, which all real estate agents have direct, live access to. However these online sites do not always pull the best, most accurate, most up to date information. For this reason, it’s important to get in touch with a local real estate agent that you can trust to get you the facts.  What is the rate of property tax rate on the property that you’re writing on? 1%? 3%?  Is the Home Owners Association really $485 annually, or is it actuall $485 monthly?

5: Don’t wonder what the seller is looking for:

Even the smallest part of an offer can land you the deal you’d been looking for. See, "How to get your real estate offer accepted."  proceeds, timing, a possible rent back, a quick close, a long close, inspections, etc. You/we may not know (although there are strategies to find it) the real motivating factor behind the sale of a property you may have interest in.  So addressing ALL possible terms of an offer will leave you with the best odds of having your offer accepted.

6: Don’t wonder what you’re getting: Due Diligence

If you’re not an absolute expert, or you’re not buying new construction, I strongly advise that you hire an inspector to perform a home inspection and a pest inspection.  Don’t let the market push you into buying without inspections unless you have sufficient funds to literally demolish your new home and replace it.  These inspections run in the range of $400 & $200 respectively.  You maybe be buying a 100, 200, $600,000 investment.  Don’t let a few hundred dollars stand between you and your security.

7: Don’t wonder if your new property is being cared for:

Use a property manager. Include Landscaping and/or housekeeping if you must, but don’t let your property go.  I personally know dozens of landlords with wonderful and respectful tenants.  That, however, isn't a guarantee.  Realize the the behaviors and actions of your tenant can help or hinder the value of your home, up to and including behaviors that may need to be disclosed to prospective buyers, in the event you choose to sell some day.

Now there are many, many more influences, considerations, and concerns to keep in mind.  I hope that this post has at least given you more tools than you had prior to reading it.  

Until next time, and thank you in advance for remembering me when the topic of real estate arises.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com
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