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Mistakes to Avoid When Buying Rental Property

Man shaking hands with his Realtor® after buying rental property in Seattle
Featured image

Investing in a residential or commercial property can be a lucrative endeavor. However, don’t expect to become a real estate investment expert overnight. As with other business opportunities, it isn’t always as simple as it appears. It is possible to generate money by buying and selling real estate, but it requires knowledge, perseverance, and skill. To accomplish it successfully—and profitably—there are a lot of different elements and subtleties to consider. To help you make the process of buying rental property in Seattle, we’ve prepared a list of the most common mistakes you should avoid.

Avoid these mistakes when buying Seattle rental property

One of the best ways to make money and build wealth over the long term is to invest in rental property. If you run it well, it should help you make more money and grow your capital. However, before you start looking for a Seattle investment property, you need to be prepared well. Start by familiarizing yourself with the most common mistakes investment property buyers make and do your best to avoid them.

Couple sitting across the desk from their Realtor® and discussing buying rental property in Seattle.
Buying a rental property in Seattle is a big endeavor, so you must ensure you’re prepared well and have a good Realtor® on your side.

#1 Not doing a thorough research

Many real estate investors, especially first-timers, make the mistake of not doing enough research before committing to a rental property. Always keep in mind that a good investor should do their research on the property’s size and type to figure out what kind of tenant they want to rent to. This includes a study of the property’s local market trends and how likely it is to make money. The location of a property depends a lot on what the potential renters want.

Think about how nice the neighborhood is and what it has to offer. Make sure that all of the clauses in the contract meet your needs, and if you need help, talk to a good law firm that deals with property management. Also, before buying rental property in Seattle, make sure to estimate how much money it will make and compare that to other properties in the same area. To do this, you can use different cap calculators you can find online.

#2 Overestimating your budget

The golden rule when investing in real estate is when you set your budget, you need to make sure to stick to it. We are frequently seduced by the glamor and glamour of a more expensive residence that is “just a little bit more.” Before you know it, you’ve purchased a property that’s far too expensive for you, and you’re having trouble making the payments.

Again, remember why you’re investing, and don’t get emotionally invested and connected to a specific property. Making payments, you can’t afford will make your life more difficult and your financial situation worse. As a result, take care not to overextend yourself. So before you even start browsing Seattle properties online, take your time to analyze your finances thoroughly and set a realistic budget.

Two women sitting at a table, one of them taking notes while the other one is explaining something on her laptop.
You can always hire a financial advisor and get help with setting your budget.

Consider even the smallest expenses you expect to incur, even the ones not related to this purchase. For example, you might be moving to Seattle from a completely different part of Washington, and you’ll need to team up with trusted experts to help you with your long-distance move. Hiring movers will cost you and can make a significant dent in your budget. Or, if you’re buying a Seattle rental property from out of state, you need to factor in the costs of frequent flights you’ll need to take.

#3 Underestimating what’s involved in being a landlord

It’s not a secret that most people buy investment properties with the intention of profiting. Others may inherit them and believe they may profit from them. In either case, owners of investment properties frequently underestimate how involved they’ll need to be in order to make a profit. Therefore, before buying a Seattle rental property, make sure to understand how much effort and time you’ll need to dedicate to it.

First, in order to get a good lease price, there may be some physical labor you’ll need to do. Then, you’ll have to advertise the property (to the right people at the right price). You’ll also be responsible for maintaining the property and ensuring everything is in working order. Of course, you’ll also get to actually collect the rent. All of this takes time, as well as knowledge and abilities. It is not just a weekly requirement that you can handle within one hour.

#4 Not hiring a good Seattle Realtor®

Many people think that buying an investment property is the same as buying your family home. This makes them believe that handling this task on their own is a good idea. After all, how different and how difficult can it be? Well, that’s yet another mistake buyers in Seattle (and all over the US) tend to make.

Therefore, hiring an experienced Seattle Realtor® is a must, especially if you are investing from out of state. They will help you understand Seattle market trends and find a neighborhood where you’ll get the most of your investment. On top of that, they’ll help you stay within your budget by only showing you properties you can afford.

#5 Buying a property in a depreciating market

You might think it’s a good deal to buy an investment property in a place where prices are going down. Well, think again. When you invest in property, you hope its value will increase over time. So buying in a market where prices are decreasing isn’t always a good option. It can be just the opposite.

Two people sitting at a desk, working on their laptops and writing notes on a paper.
Your Seattle Realtor® will have market insights that are crucial for you to make the right purchase.

No amount of research or statistics can tell you for sure when prices will start going up again in that area. If there are fewer people in an area, there are fewer people who might want to buy or rent there. This usually means that prices will go down, too. Therefore, always look for investment properties where demand is growing faster than supply, as this tends to drive prices up.

Good luck buying rental property in Seattle!

We hope you enjoyed reading and, more importantly, that our article made buying rental property in Seattle that much easier for you. Remember—the key is in hiring experienced and knowledgeable professionals to assist you along the way. So, before anything, make sure to reach out to Seattle’s finest Realtors®, and you’ll ensure you have a smooth and successful real estate adventure!

Posted in: Investment Property Tagged: Real Estate Investments, Rental Market

Where Next: Santa Fe

This month, Where Next visits Neil Lyon of the Neil Lyon Group, for an inside look at Santa Fe, New Mexico!

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Posted in: Destinations, Investment Property, Relocation, Sothebys Tagged: Living in Santa Fe, Move to Santa Fe, New Mexico, relocate, Relocate to New Mexico, Relocate to Santa Fe, Santa Fe, Santa Fe Lifestyle, Sotheby's International Realty New Mexico

Where Next: Nashville, Tennessee

 

This month, Where Next visits Nashville, Tennessee with Zeitlin SIR Managing Broker, Stephanie Brooks.  The SeattlebyDesign team invited Stephanie to share insights with us about what makes Music City such a special place.

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Posted in: Destinations, Investment Property, Relocation, Sothebys Tagged: homes for sale in nashville, moving to nashville, nashville real estate, nashville tennesee, seattle, seattlebydesign group, Sotheby's International Realty, sotheby's realty nashville, Zeitlin SIR

Where Next: Tucson, Arizona

This month, Where Next visits Tucson, Arizona with Russ Lyon SIR’s, Marta Harvey.  The SeattlebyDesign team invited her to share insights with us about this warm weather locale that many PNW residents flock to annually.

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Posted in: Destinations, Investment Property, Relocation, Sothebys Tagged: homes for sale in tucson, moving to tucson, Russ Lyon SIR, seattle, seattlebydesign group, Sotheby's International Realty, sotheby's realty tuscon arizona, tucson arizona

Where Next: Hood River, Oregon

This month, Where Next visits Hood River with Greater Seattle native, Molly Donnell, and her distinguished team at Cascade Sotheby’s International Realty. The SeattlebyDesign team puts great effort into ensuring we have a solid network of brokers from around the corner to around the globe so we can assist our clients wherever their journey may take them. When it comes to Hood River, there’s one go-to advisor we are eager to recommend to our clients, Molly Donnell. Without hesitation, Molly was willing to share a little insider knowledge with our team for those considering a move or secondary home in Oregon.

When asked to share about her now-home of a dozen years, Molly offered this:

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Posted in: Destinations, Investment Property, Relocation Tagged: Cascade Sotheby's International Realty, Hood River, hood river homes for sale, Molley Donnell, mt. hood, Oregon, outdoor activities near seattle, Real Estate Agents in Hood River, seattlebydesign, The Columbia River Gorgeo, vacation home in hood river, vacation towns near seattle

Where Next: Insights from Our Broker Network

This month’s Where Next takes us to Coeur d’Alene, Idaho where you’ll enjoy everything that a four season resort town has to offer and more. Located just 30 miles east of Spokane, Washington, CDA (as it’s often abbreviated) is the largest city in Northern Idaho Continue reading…

Posted in: Investment Property, Realogics Sotheby's International Realty Tagged: Coeur d'Alene, investment property, Lea Williams, Luxury Real Estate, Second Home

Where Next: Insights From Our Broker Network

This month’s Where Next brings us to our neighbors in Walla Walla, Washington! Danielle Beebe, a Broker with Walla Walla Sotheby’s International Realty, graciously shared her perspective of this Pacific Northwest gem with our team. If this glimpse at the infamous wine country town in Eastern Washington peeks your interest, please reach out to us, we’d be more than happy to arrange an introduction!

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Posted in: Investment Property, Realogics Sotheby's International Realty, Relocation Tagged: Danielle Beebe, for sale, housing, market, move, Pacific Northwest, relocate, RSIR, SIR, Sotheby's International Realty, Walla Walla, wine country, wineries

Where Next: Insights from Our Broker Network

Let’s visit PALM SPRINGS with Realtor and Principal to Team LANGE BLEA, Marc Lange!  Marc is a 17-year real estate veteran and Top Producing Agent in the Coachella Valley, a favorite destination for Pacific Northwesterners. He co-leads a skilled team that has represented no fewer than 84 transaction in the last 12-months.  Marc’s 15-year hospitality background is well-evidenced by a 4.9 client rating across an astonishing 185 Zillow reviews!  If you’re thinking about a second home in Palm Springs or perhaps relocating and spending summers back in Seattle, Marc is definitely someone you should schedule some time with and it would be our pleasure to introduce you. Continue reading…

Posted in: Destinations, Investment Property, Realogics Sotheby's International Realty, Relocation, Rental Market Tagged: California, Coachella Valley, golf, Marc Lange, palm springs, Real Estate, Relocation, Sotheby's International Realty, Southern California, team lange blea, where next

Where Next: Insights from our Broker Network

St Croix in the U.S. Virgin Islands!  This month’s contribution comes from Vanessa “Ness” Fennessey, who descends from a line of London-based realtors dating back to 1804.  If you like to watch HGTV’s House Hunters International, you may have seen her in not-one-but-two episodes that feature the popular island.  Like many before her, Ness visited St. Croix in 2001 and fell in love with all the island offers.  Plan a visit and connect with Ness for some sage guidance.  She would be delighted share with you the virtues and secrets of island living, followed perhaps with a tour of available properties.

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Posted in: Destinations, General Real Estate Information, Investment Property, Realogics Sotheby's International Realty, Relocation Tagged: hgtv house hunters, house hunters international, Real Estate, seattle —, Seattle Real Estate, seattlebydesign, st croix, us virgin islands, vanessa fennessey

Where Next: Insights from our Broker Network

CENTRAL OREGON! This month, we’re exploring some deep roots in Bend, Oregon where Ellie and Caleb Anderson are The Bend Property Pros Team at Cascade Sotheby’s International Realty. Their favorite part about living in Bend? The natural beauty and unlimited opportunities. 

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Posted in: Destinations, Education, Investment Property, Realogics Sotheby's International Realty, Relocation, Sothebys Tagged: Bend Property Pros, Caleb Anderson, Central Oregon, Ellie Anderson, Outdoors, Recreational Activites, seattle —

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