Real estate investing may seem intricate, yet a large portion of investors have a tendency of losing money in several different ways. If you’re still getting your feet wet with investing, be careful to avoid the following risks.
Not properly budgeting repairs. Unless your intentions are to focus solely on turnkey properties, chances are you’re going to need to do some updating or repair work on the investment property if you’re looking to maximize equity. These repairs could simply be for aesthetics (a new coat of paint) to something extensive such as a full renovation. When you have your eye on a prospective investment, it is imperative to try and determine a repair cost estimate that is close to accurate as possible. You may wish to see about including a contract contingency clause in your contract allowing a deal withdrawal if the home inspection reveals unforeseen issues with the property.
Spending too much on contractors. There is always a lingering possibility that a contractor may try and rip you off and they can be difficult to work with. It’s also important to ensure the contractor you work with is trustworthy. If significant investment property repairs are involved, always get at least a trio of quotes from different contractors. As you grow in confidence, consider building long-term relationships with contractors you’ve grown to trust.
After-repair value (ARV) overestimation, overestimating rents for long-term properties, tenant damage, there are many factors that need to be taken into account.
This update is by Monroe Funding Corporation, a direct equity lender serving clients throughout Central and South Florida. We specialize in first mortgages on non-owner occupied residential and commercial property investments as well as real estate loan options. Our fast and flexible loan programs get you to the closing table quickly and professionally. For more information on hard money loans Miami, please call 954-816-0388 or fill out our application.