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.
#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.
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.
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!