While it can’t be denied that real estate is a high-reward field of investment, it’s equally undeniable that such investments carry quite a bit of risk. Of course, this isn’t to say that some investments aren’t considerably safer than others. Although you may not be able to eliminate the risks associated with real estate investments entirely, there are numerous ways you can keep those risks to the barest of minimums. Anyone looking for a certain level of security in their real estate investments will be well-served by the following pointers.
Seek Advice from Experienced Investors
Any inexperienced investor stands to benefit from knowledge shared by investors with ample experience in real estate. So, if any members of your usual circle have dabbled in real estate investment, take care to get in touch before proceeding to make any big purchases. If you don’t have any friends, family members or casual acquaintances with real estate expertise, get in touch with a highly-rated real estate investment company. The right company will be able to provide you with invaluable advice on a variety of subjects. From location research to market trends, any real estate-related inquiries you may have will be addressed in a timely manner. Furthermore, if you’re looking for pointers on getting the most for your money, seasoned experts should be able to provide guidance on how to invest 100k in real estate.
Always Insist on an Inspection
When exploring potential investment properties, you should never allow yourself to be talked out of a pre-purchase inspection from a certified home inspector. Even if the seller is extremely forthcoming about any outstanding problems with the property, there could be a host of issues of which they’re completely unaware. Furthermore, if you abstain from having a property professionally inspected, you may find yourself unable to have it covered by the best home insurance.
Insisting on an inspection ensures that you’ll be able to make a fully informed investment decision. In addition, a pre-purchase inspection can prevent you from overpaying for a property that’s plagued by issues you hadn’t previously been made aware of. For example, if the results of an inspection reveal the presence of problems that the seller had not brought to your attention, you have every right to ask that the sale price be reduced accordingly. Depending on the size and scope of the problems, you may even find walking away from the deal to be a wiser course of action.
You should also refuse to do business with sellers who refuse to allow inspections, as such abrasiveness may indicate an active effort to conceal issues with the property. Additionally, even if a seller’s aversion to inspections doesn’t stem from a desire to hide problems, such behavior is extremely suspicious, and no investor who values peace of mind should purchase a property that hasn’t been subjected to a professional inspection.
Be Aware of Long-Term Costs and Operating Expenses
Long-term costs and operating expenses should be foremost on the minds of any investors who are interested in purchasing larger rental properties. As any longtime landlord can attest, apartment buildings and condo complexes that contain dozens – or hundreds – of units are considerably more expensive to maintain than smaller single-family rentals. So, before committing your capital to such an investment, it’s strongly advised that you take the time to calculate the aforementioned costs.
For starters, larger rental properties generally require full-time maintenance personnel, so you’ll need to take these individuals’ salaries into account when calculating monthly expenses. Furthermore, if you have no intention of turning property management into your primary occupation, it’s practically a given that you’ll need to enlist the services of an experienced property manager. In addition, you’ll need to take annual property taxes and monthly utility costs into careful consideration – especially if utilities are included as part of the rent.
Although some investors may argue that high risks are necessary for big rewards, it’s hard to deny that some investments are much safer than others. While assuming that success is a guarantee is ill-advised, taking certain measures can considerably reduce your odds of making a real estate investment that you regret. As such, any investor looking to keep risks to a minimum would do well to put the tips outlined above to practical use.