With years of experience under our belt, these are the five most common ways Austin investors make when purchasing an investment property, and how it leads to them overpaying.
1. Austin Investors Being Influenced by Emotion
Purchasing a property is exciting, but don’t let it blind you from the repairs of a property. This is one way Austin investors overpay for their property. To counteract the excitement, take three deep breaths in the car before viewing the property to slow your heart rate and calm your mind. Investing is fun, but make sure business is the first priority!
2. Offering Sight Unseen
You can literally pay the price by not viewing the property beforehand. Photos don’t show the actual state of the property and details like foundation problems, the area around it, etc. Even if you can’t view the property as your REALTOR®, we can tour it on your behalf. Take the time to see the property beforehand or your REALTOR®, so you don’t lose money later.
3. Overestimating Your Skills
The secret to being a good investor is not letting your ego overwhelm you during unpredictable market shifts. Everyone makes mistakes, but it’s what we do after them that counts. When ego gets in the way, investors tend to take bigger and more expensive risks that might not pay off later in the Austin market. It’s about finding the balance between ego and practicality that will make you outlast other Austin real estate investors.
4. Austin Investors Dismissing Other Factors
The physical condition of the investment property is important, but it’s not the only factor that will determine its success. Commonly dismissed factors are zoning restrictions, homeowner associations, and property and sales tax. As your REALTOR®, we can help you research and calculate these other factors. Once you have all the numbers, you have an accurate budget for how much it will really cost to buy and renovate the property.
5. Misjudging the Time Needed for a Project
Buying the investment property is the first action step. The next is renovating. The final common Austin investor mistake is misjudging the time needed for a project. Investors can underestimate how much time is needed for projects when they’re caught up in the whirlwind of buying, closing, planning, and renovating. While it might be a short turnaround for certain projects, you must remember that adding on projects will also add to the timeline. And more time and projects mean more money that you’ll have to front. The longer the house sits vacant and not on the market to be sold or rented, means you could be losing money.
Instead, be realistic about how long renovations and repairs will take. Err on the side of caution and give yourself a few buffer days to account for any unexpected delays out of your control like weather, government approvals, and contractors.
Check out our free downloadable report to discover the other “Real Estate Investment Mistakes to Avoid” or learn “What Renovations Give You the Best ROI in Austin?” Contact us if you’re ready to buy, sell, or invest in Austin!
