Buying an Investment Property May Have Some Pitfalls.
Have you ever bought an expensive dress that seemed to suit you just fine in the beginning only to realise a couple of hours later it’s not a deal to die for? Well, that probably hurts but not as much as spending all your money on an investment property that doesn’t pay off the way you expected it would. The trouble with investment properties is that you give much, much more than you do when shopping for clothes. Well, here are some pitfalls to be aware of before you even start looking for real estate properties. I’m going to help you keep from the disadvantages that purchasing a real estate property may bring along the way. Ladies (and you gentlemen), better have a look at this.
Sell Everything or Nothing
Since the final goal is to make profit from the real estate you are about to purchase, you need to make sure you’re getting a good deal on it in the first place. And back to that dress you bought and you didn’t find useful… Imagine you need to earn some extra money in a hurry. What you can do is sell the dress and get the most of it in no time. But when it comes to a real estate property, it’s not that simple. I mean, you can’t sell one single room and keep the rest of the house. You can’t sell a property room by room, you just can’t. That’s not how it works. You either sell everything or nothing. Thus you’ll have to face all the consequences, the good and the bad sides of buying an investment property.
Rent it Out or Resell
Just like a dress may have many uses (formal dresses, casual dresses, party dresses, prom dresses), an investment property may be used to generate profit in several ways. The most common one is to rent it out. So what could possible go wrong here? Well, everything. For starters, you may struggle to find a tenant for months. This means that you will have to cover all expenses yourself and the bad new is you don’t even know how long it will take before you attract someone. But finding a lodger isn’t the only concern. What if the person that takes shelter in your real estate isn’t the tidy-and-responsible kind of renter?
Speaking of that, did you know that there are websites that provide tenant database where bad tenants are exposed? God bless the Internet! For example, donotrentto.com is a great tool for property managers and landlords to search thousands of tenants profiles created by their previous landlords. I think checking that your potential tenants aren’t on the bad list is the first thing to consider before handing over the keys. And as far as I know, it’s practically legal.
Additionally, you’ll have to upgrade the property from time to time, repair broken items and replace old furniture. Mind you, this can be a very costly investment.
Now, the second way you can benefit from your real estate property is by reselling it. The trouble with reselling is that the value of your residence might go down, preventing you from getting your money’s worth.
But there is more to it. Now imagine you want to sell the dress that doesn’t suit you. You can’t sell it to just anyone. You can’t sell it to a man because men don’t wear dresses (well, normally). The ideal buyer is a woman but not just any woman; it’s someone that wears the same size. It also has to be somebody that likes the colour, style and length of your dress. Likewise, you can’t expect that your real estate property will suit everybody’s needs, which makes selling it a little bit more difficult.
Electricity, Plumbing and Other Issues
Now that I mentioned furniture and repairs, what is the condition of the real estate property you want buy? Also, is it furnished or unfurnished? Are there any issues that should be handled before the purchase?
I remember back in 2003 that power outrage which practically paralysed southern London. I know it doesn’t happen so often but it is a reminder of how energy controls our lives. And it certainly makes you think about your electrical system. At least you should consider it when buying an investment property. My advice is to have the entire system checked and diagnosed by HomeMates Refurbishment W5. And while you’re on it, don’t forget to inspect another important part of the property – it’s plumbing system. From my experience I know that a burst pipe is one of the worst things that can happen, affecting your daily life significantly.
Budget Cuts
Last but not least if you decide to invest in a real estate property you may not have money to buy more dresses. All jokes aside, but have you considered that once you buy an investment property you’ll have to live on a tight budget for weeks and even months before you get your money’s worth? Are you prepared for budget cuts? As you can see, the hardest part is to make that investment work for you not against you.
Follow my advice and don’t forget that buying an investment property isn’t quite the same as buying a dress. So be very careful.
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