8 Mistakes to Avoid on Your First Real Estate Investment

Investing in the real estate business is not that simple. Otherwise, everyone in the real estate business would be a millionaire. There are lots of mistakes that first-time real estate investors make that you should be aware of. Many of these are avoidable when you apply sound knowledge and common sense. Here is a list of common real estate investment mistakes that many first-timers make and how to avoid them.

  1. Lack of research

Before many people buy a television or a car, they ask a lot of questions, compare many models, and try to determine if their purchase is worth the money. The effort that goes into buying a home should even be greater. There are also research considerations for different types of investors, whether you are a land developer, flipper, personal homeowner, or a landlord. Not only must you ask a lot of questions about the property, but you must also ask about the neighborhood that the property is located. Here are some questions to ask:

  • Is the property built near a commercial site, or are there prospects for long-term construction in the vicinity?
  • What is the motivation for selling?
  • What is new in the property and what must be replaced?
  • What did the owner pay for it and when?
  • Is the property placed in a flood zone or a problematic area such as are prone to termite or radon problems?

Knowing this information will prepare you for any eventualities and help you know what to expect in future.

  1. Doing everything alone

Real Estate Agent

Trusted Savvy Real Estate Agent, Patricia Wagner

Many investors think they know a lot and that they can close a real estate deal on their own. You may have completed several deals on your own in the past, but remember, things may not go very well in a down market. And if this happens, there is no one you can turn to for help to fix a real estate deal that went sour. Thus, you should make friends with experts and tap every resource that will help you make the right purchase. Your list of experts should at least contain an insurance representative, an excellent attorney, a competent home inspector, a savvy real estate agent, and a handyman. These people should be capable enough to inform you of any flaws in the home or neighborhood. And the attorney should be able to alert you in the case of defects in the title or easements that may come back to haunt you in future.

  1. Wrong location

In the real estate business, location is key since it determines the property prices, market, types of properties, the tenants’ pool, the rent, availability of other rental properties, laws, and regulations, etc. Although it may be easier for you as a first-time investor to go to your local market because of the knowledge you already have, don’t exclude the option of an out-of-state investment if your local market is not suitable for investments at the moment. So, study your local market thoroughly to determine if it is amiable to buy and manage an investment there. If it isn’t, consider markets beyond a 25-mile radius where it is more profitable.

  1. Heart over head

When buying a home, 90 percent of your purchasing decisions are based on your emotions, and only 10 percent relies on logic. Since this is your home where you will raise your family, this is understandable. However, when it comes to investing, making your heart determine your purchasing decision is a mistake to avoid at all costs. If you let your sentiments cloud your judgment, you are more likely to over-capitalize on your purchase instead of negotiating for the best price and outcome for your investment plans. Thus, always buy an investment property based on research analytics. Ask yourself whether it is the best location that will attract high-quality tenants and whether it will provide the returns and gains you require.

  1. Buying too big

As a real estate investor, you will usually learn by doing. So, as a first-time real estate investor, don’t jump in with a large investment property. Purchasing a large-income property such as multi-family home costs more and is more expensive to manage. Thus, experts advise you to start with smaller, less luxurious properties such as a single-family home or apartment which you can afford to purchase without going bankrupt and which will teach you the skills you need for managing a property and being a landlord. After mastering these skills, you can raise your game by purchasing a new property every two to three years.

  1. Underestimating the costs

As a first-time real estate investor, opt for positive cash flow rental properties. The factors that determine cash flow are rental income and costs. Thus, it is crucial to get the most accurate estimates of the expenses. As a new investor, you may undervalue the costs involved in finding the right tenant or forget about the repair costs, and these will lower your profits. The best solution is to get realistic, research-based estimates for purchasing, running, and managing your investment property.

  1. Choosing bad contractors

Unprofessional ContractorIt is an expensive mistake to use multiple contractors to do your job. Flipping houses is quickly becoming a popular trend in real estate investing. Thus, it is vital to find contractors who will do a professional job, clean up the site, and finish the job on time. The means of finding the right contractor for your rental or fix-flip project will determine your success.

  1. Choosing wrong partners

Real estate investment partnerships can prove to be very beneficial for you as a new investor especially if you have limited knowledge or financial resources. However, they may also be deadly traps. Thus, as a new investor, don’t be ready to enter into any partnership just for the sake of having someone to share the risks with or buying a bigger property. Instead, choose your partners carefully among proven experts and professionals, and they must be people you can trust.

Real estate investing is a profitable business, but is not as simple as it looks. There are many things to learn, and you will need to work with many experts and professionals with a good reputation to gain prowess and attain your financial goals. So, tread carefully and follow this expert advice and you will be on your way to the top.

How to Prepare Your Home for a Spring Sale

Spring is a peak time in the real estate market. If you’re selling your home, having a few months to prepare can make the difference in how appealing it is to potential buyers and quickly your home sells. Here are some valuable suggestions on steps to take to ensure your home sells for the price you want.

Real Estate Snap ShotPlan A Home Inspection

When you’re selling your home, it’s a good idea to have an inspection done for any potential issues before you place it on the market. If problems are uncovered once you list your home, it could take longer to sell and cost you more money to make necessary improvements.

Research Homes For Sale

One of the biggest decisions is whether to sell your home or buy another home first. Research home prices in the area in which you plan to move. A realtor can assist you with market prices and how fast homes are selling in your region, so you’ll have an approximate idea of how long it will take you to find a new home. A realtor can help you with the financing during the transition phase of the sale.

Talk To Several Realtors

You should interview different realtors to find out what they can offer in your price range. Don’t automatically choose the realtor that says they’ll sell your home faster than anyone else. The realtor should provide you with a market analysis and be familiar with the local area in which you plan to buy your next home.

Early Spring Cleaning

Everyone has items that clutter their home. Before your house goes on the market, do a thorough cleaning and get rid of the clutter. Potential owners want to envision themselves living in your home and don’t want to see your family photographs or children’s art projects and toys scattered around the house. Put away kitchen items you use everyday when you’re having a showing.

Make Improvements To Your Home

Expensive renovations to your home isn’t always an option, but aesthetic improvements will make your home appealing to buyers. Give interior walls a fresh coat of paint. Replacing old light fixtures and ceiling fans or replacing bathroom fixtures and grout will give your home a new appearance.

You could find local contractors who don’t charge a lot to make cosmetic improvements such as painting kitchen cabinets or refinishing floors to spruce up the interior. Determine what your budget must be to make the necessary improvements and how much time will be needed to get everything done.

Begin Packing

Packing months before your home goes on the market may not sound feasible, but it’s a good time to go through your attic and basement and give away or sell items you won’t need. Items you won’t need right away can be packed and put aside.

Put items aside to host a Spring sale as the time gets closer for you to move. Packing away unnecessary items give your home a larger appearance, and potential buyers can determine where they want to place furniture when they move in.

Make Your Home Sparkling CleanCleaning

Make sure everything inside and out is clean and sparkling. Furniture should be polished, floors should be clean, and carpeting should smell fresh. Before you put your home on the market, have a cleaning company come in to give your home a thorough cleaning and have your carpets professionally cleaned.

Return On Your Investment

You probably don’t want to spend a lot making home improvements before you sell, but making upgrades can give you the most ROI. For example, if your floors are vinyl tile, you may upgrade to laminate or hardwood floors. Older appliances can be upgraded to newer, more energy efficient brands. Replacing older appliances with stainless steel models are a plus. Wood-grained counter tops can be replaced with granite or quartz.

Check Out Homes in Your Area

When you’re selling your home, a little homework goes a long way. Look at listings in your area. Find out how long the homes have been on the market. Look at houses in a similar price range with amenities that match your home. Researching the local market will give you an idea of what upgrades you need to make to your home and what your asking price should be.

Curb Appeal is Essential

Some buyers decide whether or not they like your home when they see it for the first time. Mulch your plant beds, trim excess growth from shrubs and trees, make sure your lawn is manicured, and make sure the exterior of your home looks welcoming. Small touches like painting the trim and front door or potted plants on your front porch can give it the “wow” factor.

Although you may have to spend money for a Spring sale of your home, by making necessary improvements, you’re more likely to get a good return on your biggest investment.

Why Hire a Home Inspector When Buying a Home

ValueFor most people, buying a home is the largest purchase and most significant investment they’ll ever make. Finding the perfect home is an important part of the process, so hiring a home inspector can ensure that there are no issues lurking in a property that you’re certain is “the one.” Here are eight of the key reasons to hire a qualified home inspector.

  1. You can ensure value for your money.

It’s impossible to tell whether a home is worth the price you’re offering unless you know everything about its condition. A home inspector can identify existing health and safety problems as well as other negative (and positive) aspects that may affect your decision to purchase the home.

  1. It helps you negotiate.

Having a home inspection can help you decide on a fair offer price for the home. If there are significant issues, you can negotiate with the seller for a lower price or to fix certain items. In some cases, buyers choose to walk away from a home contract if the property will need more work than they anticipated.

  1. It is comprehensive.

Your qualified inspector will examine all visible interior and exterior areas of the home, including structures such as the roof, foundation, walls, windows, doors, insulation, basement, detached garage, and attic. He or she will also evaluate the electrical, plumbing, heating and cooling systems, test appliances, and even check for evidence of termites. After the inspection, often within 72 hours, you’ll receive a detailed written report.

  1. It protects you and your family.

As previously mentioned, a professional inspector will detect any issues with the home that could affect the safety of the occupants. This could include radon, carbon monoxide, mold, or faulty or damaged wiring, as well as easily fixed problems like a leaky faucet that could lead to more serious issues if left unchecked.

  1. It could detect legal issues with the home.

Some homes have additions, renovations, or structures such as decks or pools that have been installed without permits and may not be built to code. This could affect the home’s value and taxation as well as impact the ability to get homeowner’s insurance.

  1. It can find construction problems.Inspector

If you’re buying a brand new home, you may think you’re impervious to the need for an inspection. In fact, having an inspection can allow poor workmanship, construction issues, mistakes, and any other problems to be addressed before you move in, potentially saving you time and money later.

  1. It helps you meet insurance requirements.

In many cases, your homeowner’s insurance company may require you to have a home inspection as a condition of coverage. This is especially true if you need to meet specific requirements, such as flood zone protection.

  1. It helps you forecast future expenses.

Even if a home inspection doesn’t detect any major issues, it can be an important factor in budgeting for future expenses. For example, you’ll have information about the condition of the roof and other structures, systems, and appliances.

If you’re buying a home, finding a qualified inspector could potentially save you thousands of dollars, a small price to pay to protect your peace of mind.

Real Estate Snap Shot for Florence Kentucky

Many families are choosing to relocate to Florence, Kentucky, and it is not hard to see why. Only a twenty-minute drive from Cincinnati, the city provides easy access to a major metropolitan area while offering a small-town lifestyle that is family friendly and economical. Residents can make a short drive to enjoy two major league sports teams, numerous museums, and a lively arts scene, or stay at home to enjoy the peace and serenity of Midwestern, small-town life.

Real Estate Snap Shot

With a population of just over 32,000, it is one of the eight largest cities in Kentucky, and the largest in Boone County (see HomeTownLocator). While being the largest city in the country ensures that residents receive high levels of public services, it is still a small city by any standard. Consequently, it experiences limited traffic congestion, a low crime rate, and all of the experiences one would expect in a small Kentucky town.

 

Family features are plentiful. The city has nine schools (five elementary schools, two middles schools, one high school, and an alternative center). It also boasts seven parks, most of which include playgrounds that will appeal to young children, as well as ball fields for older kids (see the city park directory). Nearby outdoor recreation areas include Doe Run Lake Park and Boone Woods County Park.

 

While the city does not have major theme parks, professional sports, or high-end museums, residents can find those attractions and more within a reasonable driving distance. The city is also a thirteen-minute drive from Cincinnati/Northern Kentucky International Airport, a major airport with direct flights to Paris, Cancun, and the Dominican Republic, as well as numerous other international and domestic destinations (see CVG).

 

The economics are also appealing. The city’s cost of living is more than 11% below the national average, while unemployment and median house cost are also low (see Bestplaces.net). Many residents reap the benefits of a big-city salary in Cincinnati while spending at a small-town rate. Low housing costs provide families with many housing options.

 

As of this writing, Zillow.com shows 257 homes for sale within the city limits. Trulia reports a median sales price of $135,450 and a median rent of $1,362 per month; both numbers represent a very low cost of housing compared to most communities near major American cities.

 

One sure sign that this community is a good place for families is the fact that a disproportionately high number of families are choosing to settle there. While 72% of residents are homeowners, the median age is only 35 years, reflecting the family focus of this community. Almost all workers (97%) commute by car, with many of them making the twenty-minute trip into Cincinnati (see Trulia).

 

For parents raising children, there are numerous benefits of living near other families. Parents want their children to have playmates, and they want to associate themselves with other parents who are in the same stage of life, facing similar challenges.

 

Families that live within the city limits of Cincinnati may, therefore, benefit financially and in other ways by moving to this Northern Kentucky haven. The increase in commute time is minimal, while the decrease in stress and expenses is profound. With a short move, a family can replace congestion and noise with baseball teams, outdoor adventures, and friendly neighbors.

 

For parents seeking an inviting community with an easy commute to Cincinnati, Florence could be the perfect city. Considering the reasonable real estate prices and favorable economic factors, the city is a very appealing hometown for families.

7 Reasons to Use a Realtor to Sell Your Home

With so much real-estate information available on the Internet alone, it’s not unheard of to sell your home without a professional by your side. Although this concept sounds appealing to homeowners, it might end up as a detrimental feature to the selling process. In fact, it’s critical to have a realtor by your side as you sell a home. Take a look at these top reasons why a realtor is your greatest selling asset.

  1. Neighborhood Expertise

Sold Home For Sale Real Estate Sign and Beautiful New House.You may know the favorite eateries in the neighborhood or where the best playground is located, but realtors
have greater knowledge of their particular territory. They’ll have the latest school-quality information that’s
incredibly important for parents moving into an area. Crime data, economic predictions and other information is also the business of any good realtor. With this information, realtors can show off the home with more value than just the amenities and included square footage. Selling a top-rated school system gives the home a boost on its asking price before buyers even walk in the door.

  1. Industry-Trend Knowledge

Realtors are also valuable resources for industry knowledge. In the next year, a certain neighborhood might go up or down in price based on a new business renovation occurring a few miles away. This information helps the selling realtor because he or she can place indirect pressure on buyers to place a bid now rather than later. Without a professional by the seller’s side, some lucrative opportunities might be overlooked. As a result, a home might have a final price that’s well below what it’s truly worth based on the industry knowledge that’s exclusive to realtors.

  1. Negotiating Skills

Realtors take many classes on their trade, including how to properly negotiate. These professionals are trained to be fair but persuasive. A negotiation is partly a psychological game where the professional convinces the buyer that a particular home is perfect for their needs. Most homeowners aren’t professional negotiators, which makes a poor deal a possibility. Allow the realtor to discuss the price, and homeowners will see a higher number in most cases. Negotiations can go up or down in price, but the realtor will always know the proper limits in either direction.

  1. The Paperwork Alone

There are stacks of paperwork to generate, read and sign as you sell a home. This process alone can be overwhelming for most homeowners. The realtor usually has a team at the office who can put together the information without much effort. They know the normal and specialized paperwork that must be included with your particular sale. As a result, no areas will be overlooked on closing day. If homeowners attempt to write up the paperwork on their own, they might sign away their rights with missing sections or poorly worded paragraphs.

  1. Ethical Sales

Similar to a doctor’s oath, realtors also pledge themselves to ethical practices during any sale or purchase. They cannot lie, cheat or deceive their clients as their hired consultant. In fact, they can’t treat the buyers poorly either. These ethics mean that your property transaction will be free from any arguments or frustrations. If a house inspection turns up with major structural problems, the realtor is trained to handle that situation with objective ease. As a result, these clients will move forward with their home dreams as challenges arise that the realtor can deal with at a moment’s notice.

  1. Their Connections With Others

Selling a home can be tough in some neighborhoods or economic times. As a solution to a difficult sale, realtors can turn to their industry connections. Other realtors might know of a buyer who’s looking for that type of property, but they weren’t aware of this home on the market. Industry contacts can be a valuable resource for realtors and sellers as a home moves through the escrow process. In many cases, an insider’s knowledge allows a sale to take place faster than it would otherwise.

  1. Knowing When to Bow Out

With all of the effort in the world, some homes simply sell faster than others. If your home has been on the market for several weeks, realtors know when to pull it. A home that remains on the market for too long tends to look unattractive to buyers. People wonder if there’s something wrong with the property. Realtors can remove the listing and add it again in a few weeks. Although sellers may not appreciate the waiting time, the new listing might spark more buyers than before.

Realtors will routinely take classes and update their skills over the years. If you’re on the lookout for a professional, interview several people before committing to one person. Ask him or her about their license and continuing education. Reputable realtors will have several classes in their background and a few possibly scheduled in the future. These experts will have the skills to sell your home to the highest bidder.