Avoid these mistakes of beginning investors -ii
In the first part of the article on "Avoid These Mistakes Of Beginning Investors - I " – we had discussed some of the steps you must undertake while investing in Real Estate Market. In this concluding article, we will discuss the rest of the things to remember before making any property investment in Austin, Texas.
1. Inspect, approve, and confirm all documents. The list of documents that need to be proofed can be overwhelming to the first-time investor. Building permits, zoning laws, rental and lease applications, health licenses, inspection reports, title policies - the list is long and you can't risk oversights on any of these. The right real estate professional will work with you to make sure nothing gets overlooked.
2. Get a bill of sale for all personal property involved. Many types of personal property (appliances, furniture, draperies, fixtures, etc.) can be involved with an investment sale. Be very detailed and know who owns what.
3. Charge fair rents. Vacancies, turnovers and lease terminators are your biggest expenses. Charge fair rent, treat your tenants with respect and respond quickly to their needs. It's a lot less costly in the long run to take care of the little problems while they are still little rather than waiting. A vacant property doesn't make you money.
4. Select qualified, good tenants from the start. You must take the time to check references. Previous landlords, employers, financial references, credit and judgments are all vitally important. If there are any questions, do a thorough investigation. Drive by their previous residence. A little work up front can save you all sorts of problems later on.
5. Make sure you get estoppel letters. Get letters from the tenants confirming the status of tenancy. Make sure their version of the rental agreement or lease corresponds with the seller's interpretation.
6. Don't spend positive cash flow. Most successful investors have free and clear properties. Be sure to re-invest your positive cash flow back into the property payment and speed up the amortization schedule. This decreases your debt load and increases your equity, which in turn increases your net worth.
Choose your agent wisely: Working with a full-time professional Realtor is a must. Ask questions of your agent. Find out how knowledgeable he or she is about houses currently for sale in your price range and also of houses that have recently sold. Can your agent recommend a good lender that has the reputation of excellent customer service and low rates? Does your agent ask questions of you to have a full understanding of what you are looking for to help you get the most home for the money?
You must take the time to check references. Previous landlords, employers, financial references, credit and judgments are all vitally important. If there are any questions, do a thorough investigation. Drive by their previous residence. A little work up front can save you all sorts of problems later on.
Most successful investors have free and clear properties. Be sure to re-invest your positive cash flow back into the property payment and speed up the amortization schedule. This decreases your debt load and increases your equity, which in turn increases your net worth.
Author: Aniruddha Badola
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