3 things you absolutely must not do when investing in homes!
There are pitfalls in every trade. For a novice real estate investor, you need to avoid losing your money by making unnecessary mistakes. To help you on your way Property Professional has made a list of common starters mistakes especially for you.
Pitfall 1: Buying a house above market value
It may seem obvious, but it is possible that you have fallen completely in love with a property and there are several buyers who want this property. Because you want to win, you offer the highest amount of money, so you end up paying a lot more than what the property is actually worth. When you pay more than the property value it is difficult to sell the property for a higher price and chances are that you will make a loss. So you are actually doomed to a loss of assets in advance. That is why it is important to use a checklist when buying an investment property.
So never buy a property above market value!
Pitfall 2: Buying a house at auction.
Buying a house at an auction is a trade in itself. Quite a few factors play a role which makes it very likely that you will make a bad buy. Often at auctions there are trusted faces who already know each other and award certain houses in advance. As a newcomer it is very difficult to come between them. If you do intervene and have bought the house at a reasonable price, you do not know the condition of the house. It may well be that a lot has to be rebuilt before the house is somewhat habitable. In addition, it often happens that at auction houses there are still tenants who do not want to leave. To get these tenants out is quite a hassle, especially how in the Netherlands the tenants are quite well protected. If you have more experience you can go to an auction but it is always better to have direct contact with the homeowner before a property is auctioned.
So as a starting investor do not buy at auction!
Pitfall 3: Doing little research
You may have found a good deal, property well below market value and in good condition. But because of the layout and location it is difficult to rent out or resell this property. It may be that you have found a property in a village where almost no one wants to live, to find a tenant for this or a buyer may incur the necessary costs. The house has been vacant for a long time, so you will miss out on monthly income. As a starting home investor it is therefore wise to buy a house in the larger cities of the Netherlands because they are often popular and easier to rent out. This reduces the risk that you would not be able to get a rental income.
How to start as a residential investor?
As a starting home investor, it is therefore useful to seek advice from an investment expert. But with these 3 tips you can already make yourself useful. Now that you, as a starting investor, know the three things you absolutely must not do when investing in homes, you are one step closer to your first investment home.
Involving an investment expert
If you would very much like to invest but you still need guidance, Property Professional can assist you during the purchase process. We can put you in contact with homeowners who want to sell their property below market value. We can investigate for you how much rental income a property will yield, and take care of the management for you. In short Property Professional guides you through the process of buying an investment property.
Please feel free to contact us.
