Buying a home that will be used as an investment property is a big investment. Almost every investor dreams of having a profitable investment home to generate income for decades. While profits are part of the rental industry, learning how to avoid rental property investing mistakes can increase success. There are common mistakes to avoid to get the most out of rental property investing.
5 Rental Property Investing Mistakes to Avoid
1. Buying on Impulse
Many buyers are drawn to properties for various reasons. Some people love the location while others fall in love with the look of a home. While location and property condition are important, resisting the urge to buy on impulse can help prevent a disaster. Not every property investors buy is huge income earner. Taking as much time as needed to research and plan a purchase is one element that successful investors use to cash in on rental investments.
2. Financing a Purchase
Mortgage rates are at rock bottom and it can be tempting to financing your first investment property. The reason that financing a purchase is a mistake is the long-term interest payments that are attached to the mortgage. A property can easily double in purchase price once interest is applied over the course of the loan. By not financing a home with a mortgage, additional fees and expenses can be removed from the initial sale price.
3. Not Exploring Tax Breaks
The IRS has guidelines for how to report taxable income for an investment property. Before a purchase of a home is considered, it can be helpful to a new investor to review all potential tax breaks for property ownership. Taxation for individual or corporate business entities could be higher or lower once rental income is generated. Getting the facts before exploring tax breaks can be a huge money saver.
4. Non-Professional Property Management
A rental property purchased in state or out of state will live or die based on the management of the income and expenses. Not all appointed landlords or property owners are experts in day to day property management. Hiring a professional company is one of the preferred methods that most investors use for property management. Poor property management could easily reduce monthly ROI from a rental home.
5. Draining Your Savings
Many new investors have plans of buying a property although have few methods for obtaining enough cash for a purchase. Dipping into your savings account to buy a home is not uncommon after research about the pros and cons of a property has been completed. A solid way to invest can involve more than one partner sharing the property expenses. Using a retirement account for a portion of the purchase price is another option that many investors have available. Draining your personal savings can be a bad move.
Jacksonville, FLorida Rental Market
The homes that are now owned and rented in the Jacksonville, Florida market provide an investment property solution to new investors. The range of JWB owned properties that are available for sale have paying tenants in place ready to help maximize the investment returns. More information about property ownership through JWB programs is available on this page.