Our current economy has forced many people into leasing a house rather than buying. The demand for a wide array of renting options is strong and investment minded folks with some cash are wisely looking into purchasing properties for the increase cashflow. Like many purcahsers, it is very easy to get into the emotion of buying a property, your likes, dislikes, etc. Following are 3 easily avoidable mistakes that investors can avoid that will lead to quicker capitalization and increased ROI.
1. The wisest businessman I ever had the priveledge of knowing stressed “plan your work, and work your plan”. Often investors come in with a plan. They have crunched the numbers, see the dollar signs, and ante up with a purchase. Then suddenly, bit by bit the plan begins to fade and shooting from the hip becomes the guiding principle. THIS CAN BE FATAL. Every step you take in purchasing an investment needs to be focused on getting your return as quick as possible and allowing an exit strategy in case of a change in circumstances.
2. Similar to #1 but its own animal altogether is “do not over improve”. It is so easy to begin expending available cash on unnecessary improvements. Your plan should take into account your renting clientele, what they expect, and what they will pay for it. Armed with this information, your plan should be complete and executing it a breeze. Remember its not about what you like, or other people think. It only matters what your customer wants and will pay for so give it to them.
3. If you are not going to be living there, don’t buy like you are. Investors waste time and potential cashflow evaluating options, neighborhoods, and improvements looking at this purchase like it was their home. If its not, its not. Know your client and when you find the situation that will make you money, jump on it. If you are not sure, go back to number 1 and plan your work.
The environment is ripe for taking cash out of low yield accounts and making money through real estate investing. Don’t blow your chance by following these 3 simple steps.
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