Any rookie mistakes to avoid while purchasing first rental property?
Skip the analysis and buy on a feeling
Skip due diligence
Fall in love with a deal
Don't use an agent
So many more I'm sure there's a book or two out there
There are so many to list. The most important is knowing your numbers. If you don't know how to calculate cashflow accurately, you're taking a shot in the dark. Graham Stephen has a great video tutorial on calculating Cashflow:
Also, a lot of rookie investors (speaking from experience), don't fully understand the closing costs associated with buying real-estate. So make sure you do your homework and understand the additional costs on top of the downpayment.
You'll also want to ask yourself if you want to manage the property yourself, or if you want to outsource the management of the property too... you guessed it! A property manager. This will cut into your overall profit, but could make your life much easier. A good property manager could also act as a great resource for you as you acquired new rental properties.
Screen your tenants!!! This one is often overlooked and you hear horror stories all the time about bad tenants. Make sure you get solid references, do a credit check, verify their income, and so forth.
Just a few tips to get started from one rookie to another :)
Thank you @Ryan Friess I appreciate your response and information. It was very helpful.
@Mack Benson may i ask why I shouldn’t use a agent? Currently I have one sending me listings.
ask questions than ask more questions than ask a few more questions....did I mention ask questions?
Dont feel like a question is stupid! If you have a questions ask
thats a big mistake you can ask and it can cost money in the long run
@Walter A. Ferman my intention was to list mistakes to avoid. I firmly believe you should have an agent sending you deals. I also believe you need to analyze a deal and never fall in love with it, fall in love with the numbers, not the deal.
@Mack Benson Thank you! Indeed super helpful. I’ll make sure to run my numbers and purchase based on the numbers of the property and not just the actual property itself.
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