If you are looking to purchase rental properties for the first time, you might be a bit overwhelmed by all of the many investment opportunities that are out there for you. This can make it easy for you to make mistakes when buying your properties, and these mistakes can cost you a lot of money and cause you a lot of problems. These are some of the main issues that you'll want to look out for during this process.
1. Buying Properties with Too Many Problems
One good way to really make money when buying rental properties is to purchase older properties that need a bit of work. Once you put the work in, you can rent the houses out at a much higher rate than you would've been able to originally. Just make sure that you are realistic about how much it's going to cost for you to fix up the properties that you buy; after all, you do not want to end up throwing a ton of money into a home that is in really bad shape.
2. Not Paying Attention to the Location
Location is everything for many renters. Even though you might be able to buy potential rental properties cheap by looking in out of the way areas, the problem with this is that you aren't going to be able to make very much money if you aren't able to rent them out. Therefore, you'll definitely want to look for properties in neighborhoods that are popular among renters if you want to be able to keep your units full, even if you have to pay a little more for these properties.
3. Getting in Over Your Head Financially
If things work out well, your tenants can actually pay for some or all of the mortgages that go along with your rental properties. However, you'll want to make sure that you have enough money available to pay for the mortgage on all of your properties -- and to handle your own household bills -- in the event that a tenant does not pay his or her rent on time or if you end up with a unit being vacant for longer than you expected. You'll also want to make sure that you have enough money on hand to cover repairs and maintenance for all of your properties. For these reasons, it's critical not to get in over your head financially, even for properties that seem like a great deal.
Buying rental properties can be a great way to invest in your future and to build a nice business. However, it is important to be careful about the properties that you invest in. If you avoid these common mistakes and get the help of a realtor, you can help ensure that you make the right investments.