Buying Mistakes to Avoid
To the average London, Ontario real estate investor, going out and making your first deal can be a very daunting event. Although making mistakes is just part of the game, none of us want to make a mistake that costs us our hard earned money. Learning from other real estate agents or investor's mistakes can help you go a long way in your real estate investing career. Below is a list of the most lethal real estate investing mistakes you should always avoid.
Buying a Negative Cash Flow Property
I know this sounds like a no-brainer but there are those out there "Helping" new real estate investors get into properties with such incentives as no money down, Seller pays the down payment, Seller pays for first 8 months negative rent, and Seller pays closing costs, etc. Don't fall for it! Never buy a negative cash flow property no matter what the so-called benefits.
Using Your Own Home Equity Line of Credit to Purchase Real Estate
By doing this you are actually putting your own house at risk. Always get a hard money or private money loan for fix and flips and a regular loan for cash flow properties. You can start with a hard money loan to initially buy and fix the property and then getting a regular fixed rate loan using the equity of the property as your down payment. There are other methods and this is just one example.
Buying The First House You Find
The first house is very rarely a great deal. Sometimes you might find something that looks great on the surface but make sure to do your own due diligence to be aware of any potential issues. Remember, there will always be other deals out there. Get the best London Ontario Realtor team out there - call Van Bart Real Estate Brokerage!
Going it Alone
Never do this! Instead, always find a mentor or another experienced London, Ontario real estate investor to help you with your deals. This takes some of the "Am I doing the right thing" questions out of your mind because they will have the necessary experience. Raising questions and having someone who has been through it themselves before can help prevent unforeseen issues.
Assuming That The Property is Structurally Sound and it Only Needs Cosmetic Repairs
Instead always hire a home inspector. This is a normal part of the due diligence process of purchasing a property. The home inspector can find problems no one else knows about. It’s good to trust but always verify. Make sure you get the full report and question anything that you don't like.
Trusting Only Your Realtor or Only Anyone Else to do Due Diligence on Your Behalf
Have I mentioned due diligence before? You need to get your home inspection, find a mortgage agent or broker to help you with the financing, make sure the value of the property is at or below market value and that it will cash flow. You can't blame other people if you don't do these things. Again, your mentor can help you with this process as well. Van Bart Real Estate Brokerage Inc. does every single bit of due diligence we can for our clients but it’s still best practice to do your own due diligence for peace of mind.
Going Into a Deal Without Performing Thorough Research
When it comes to London Ontario real estate, it’s not simply Location! Location! Location! It's more than that. To us it should also be Research! Research! Research! Research your target market. Is it the area you want to invest in or is it an area you want to avoid? Research the property values. Are values increasing, decreasing, or steady? Research the rent rates. Verify what your potential income from the property would be. LSTAR® (London & St. Thomas Real Estate Association) is a great resource to start with when researching real estate in London ON.
In a nutshell, real estate investment in London Ontario can be very rewarding and earn you a very handsome income, however, many of those who get into it don't follow the proper steps and often make costly mistakes. These mistakes can even make them quit, which is unfortunate. Mistakes make you better at what you are doing, but only if you are able and willing to learn from them. Better yet, learn from other people’s mistakes and start realizing your dream of financial independence and financial freedom.