Any investment is a big decision, and buying property is no exception. The best real estate professionals know when they’ve found a diamond in the rough, but they can also realize when it’s best to just walk away from a potential property.
Here are 4 mistakes to avoid when you’re buying a property for investment purposes.
- Not Financially Planning Ahead of Time
If you walk into a property and realize it needs some TLC, that isn’t always a bad thing. Sometimes a property that hasn’t been properly cared for leaves wiggle room for you to sweep in and acquire it for a decent price.
On the other hand, there are some projects you may not be equipt to handle. At East River Partners, we’re experienced with gut renovation where we redo the majority of a property’s interior — from floor to ceiling — and we budget accordingly. If you’re not prepared for that kind of commitment, be sure that any properties you’re looking at have a minimum amount of extensive repairs. A qualified inspector will be key in telling you what to expect. From there, you can decide if it is worth your while.
- Not Researching Both the Property and Neighborhood
Sometimes a property itself can tell you a story, but more often than not, you’ll need to do additional research. What is the neighborhood’s crime rate? Are surrounding properties valuable, too? Have any insurance claims been filed? Is the neighborhood growing and improving?
With that being said, you don’t have a whole month to conduct thorough research. The housing market moves quickly, especially in New York. There is a fine balance between prematurely pulling the trigger and dragging your feet to the point that you miss out on a great opportunity.
- Choosing the Wrong Business Partners
It’s common for people to join forces when investing in a property. I’ve been lucky in my experience, but we’ve all heard horror stories about people who chose the wrong business partners. Be sure that everyone involved has the same overall goals and can equally contribute to the process.
- Getting Emotionally Involved
There is a certain amount of intuition and gut feeling involved with investment, but that doesn’t mean your emotions should outweigh solid statistics and evidence. If a property looks bad on paper, a good feeling isn’t enough to qualify it as a solid investment.
If being too directly involved in a property purchase isn’t what you’re looking for, there are other ways to invest in the real estate industry. REITs (Real Estate Investment Trusts) are an increasingly popular option, as are crowdfunding platforms.
For more information on East River Partners’ investment process, visit our website.