5 WAYS TO LOSE MONEY INVESTING IN REAL ESATE
I know what the late night infomercial says. “Invest in real estate with NO money.” Sounds great doesn’t it?
It is also a big, ugly lie.
If you are thinking of investing in real estate, there are a lot of ways to lose money. There are only a few ways to make money. If you are new to the game or have the wrong mentor, you, most likely, will lose money. It is far too easy to lose than it is to win.
Here are 5 important ways that you can lose money in real estate investing.
1) Make unnecessary renovations.
The idea of renovation when it comes to investing is to add value. Meaning, you want a return on the work you are doing. Investing is not about what you like or what you prefer. Investing is about the money. Period. If you are doing work that does not add value to the resale, then you are wasting money.
2) Use overstated rental income.
Real estate agents give “ballpark” figures all the time when it comes to gross rental income. You will want to use hard numbers. Get a rental history on letterhead from the management company or managing website to verify. The last thing you want to do is to run your numbers based on an inflated sense of annual income.
3) Buy into poorly run or expensive homeowners association fees.
You will not find this expense on Zillow or Trulia or Realtor. If the investment property has a homeowners association, you will need to verify the cost per month, the financial strength of the association and any assessments that are planned for the immediate future. In many investment markets, this is the expense that is the difference between profit and loss. Ask your agent to do ample due diligence work for you.
4) Buy into re-zoning or infrastructure changes around property.
Building a massive shopping center on the lot next to a house is not an attractive amenity. Neither is widening a road that will be 20 feet from the screened porch of the property when it is complete. Make certain that you check into any likely changes in the foreseeable future in this regard. It will impact the resale value, rental rates and strength of investment.
5) Buying into flood zones, unusable land and “dead” land.
If your investment has land, you want to make sure you know that the land is usable. That means that it is also marketable for resale. Flood zones are important near bodies of water. They impact insurance, the types of property that can be built and the resale value. Usable land means that you can use it for what you intend to use it for. Preserved wetlands, protected forests and swamps are great unless you plan to build a home. Then, they are a loss. “Dead” land is my own term. It means that you bought a cemetery, protected tract or otherwise undesirable piece of property. Poor investment.
So, unlike the infomercial promises, this is not a quick turn around to profit. There is a lot of work that goes into investing properly. I suggest that you target the numbers you are looking for, hire a local agent to find properties that match those numbers and, then, run the numbers through a strict, but efficient due diligence period with that agent.
You can’t get into investing and carrying property with no money, but you sure can make some money if you are savvy about the process.
gummygunk
prguitarman
vaporwave
romaincrisis
turnnoffyourmind
yousharknotpass
izzy806