If you are dreaming of owning an investment property, what better place to do that than in Atlanta? The city has a thriving real estate industry that promises lucrative returns.
It is worth noting that just because the property business is flourishing, building a successful portfolio is not a walk in the park. For you to succeed, you need a solid understanding of Atlanta’s real estate industry, and you have to do your homework to avoid common real estate investment mistakes.
We’ve put together this quick guide to help you understand the common mistakes made by many first-time property investors in Atlanta.
Not Understanding The Law
A majority of first time investors never bother to educate themselves regarding the rules and regulations for Fair Housing in Atlanta. Most of them presume that just because they have the funds, they can acquire whatever asset they desire.
They proceed with their acquisition only to realize that they are either in violation of the legislations or that they are obligated to meet certain financial regulations like paying land rates, designing properties that meet specified housing codes, and much more.
Before purchasing any property, make sure you are conversant with what the law has to say concerning property ownership, landlord-tenant relationships, housing codes, as well as lease agreements.
Failure To Research
Carrying out detailed research before buying a property is crucial. For starters, you should conduct a comparative market analysis to help you work out the real market value of the asset in question.
Secondly, you must determine the viability of the asset in satisfying the market demands and its ability to help you earn the rental amount that you desire. You should examine as many properties as possible, preferably from different suburbs, to gain an understanding of what options are available. The findings from such investigations will provide useful feedback to help you determine whether you have a good deal or not.
Relying On The Real Estate Agents
Many first-time property investors naively presume that the real estate agent is genuinely interested in helping the buyer get a great deal. Consequently, they take whatever the agent says to be the gospel truth.
Doing so can be a mistake.
Regardless of what the real estate agent tells you, their primary objective is to sell the property. Which means they will be biased to only show you and talk to you about the good qualities the property has.
Instead of following the agent blindly, ask him or her important details about the property. For instance, how long the property has been on the market, what offers has it gotten so far, how they arrived at the asking price, as well as whether there have been any recent sales of houses similar to the one in question.
Shopping For Property Without Pre-Approval
Inexperienced property investors soon learn the hard way just how heart wrecking it feels to watch someone else get the home of your dreams simply because they raised the needed funds before you could.
Protect yourself from such an emotionally draining experience by first talking to a mortgage expert or local bank to determine how much financing you qualify for, and what requirements you must fulfill to get the funding. This information will give you the impetus you need to shop and negotiate for your dream property.
Overstretching Finances
Many people, driven by the excitement of owning their first investment property, end up overstretching their finances beyond their means. Subsequently, even though they manage to acquire the property, they end up being slaves to their investment and spend years struggling to repay the mortgage.
Instead of over committing your funds, consider going for financing whose repayments do not exceed twenty-five percent of the total property’s net income. Also, avoid borrowing more than eighty-percent of the value of the asset but rather settle for those that demand you raise at least twenty percent of the total value.
While these investments may be more difficult to find, they leave you with a much larger margin of safety.
Purchasing Property Sight Unseen
Even if you live an extremely busy lifestyle which makes it impossible for you to visit the site, you must go and view the property. Doing that will save you from making disastrous errors.
Many first timers only take part in virtual tours where they see the assets online and arrive at the buy decision based on what they see. What these investors fail to understand is that the images on the virtual tour are designed to entice the viewer to buy. In fact, in most cases, the actual property is not as striking as the photos. For this reason, it is judicious for you or someone you have confidence in, to go physically assess the investment property you wish to acquire.
Ignoring Inspections
It is unwise for a real estate investor not to inspect the property you want to buy. You should always make it a habit of hiring a professional house inspector to check the asset for any evidence of termite infestations, sub-standard renovations, malfunctioning fixtures like smoke sensors, HVAC systems and much more. It’s also very important the foundation is inspected thoroughly. Finding out your new property needs foundation repair can be a huge expense. Foundation repairs can easily turn your profitable investment into a loss.
Failing to perform a proper inspection of the property can result in a lot of unforeseen costs, which can yield your investment unprofitable.
While this list is not exhaustive, it addresses many of the primary concerns faced by first-time investors. If you make sure to follow this list and perform the required due diligence, you’ll soon be on your way to enjoying the rewards of owning investment property in Atlanta.
If you would like assistance in buying investment property in Atlanta or the surrounding areas don’t hesitate to call us at 770-744-4811 or contact us by email at admin@aramisrealty.com