Investing in real estate property is a good way of making an additional income, and it is a good option for people who do not want to rent property or start a business.
However, investment blunders can cause major issues when a person is first starting out. Identifying these issues from the start will give a person a better chance of avoiding these problems.
Do not purchase budget property only
Forbes discusses common investment mistakes that people make. Budget buying is one potential issue. A person should not base their potential purchases on the down payment of a property, or the property price itself.
Deals that may fit your financial capabilities are great to find, but they may not be good deals. Properties that undergo a significant drop in price or have lingered on the market for a notable amount of time should be the subject of research before any purchases happen.
Beware of small buys
Next, watch out for small buys. If a person can snap up a property without any issues at all, this means it might be harder to turn a profit on it later down the line. Hiring a property manager is harder with smaller properties. On top of that, if a person has a building with a one-tenant capacity, this means they have a 100 percent vacancy rate if that tenant does not work out.
Watch out for leverage
Also, take care with leverage. Real estate that has over 70 percent leverage often loses deals. The ideal number to strive for is 65 percent, instead, as this can help people manage future financial issues.