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Six Housing Investment Mistakes You Should Avoid

Investing in real estate in the Washington, DC area can be very profitable for a knowledgeable investor. Some investors in rental properties report annual returns of 5-6 percent of the property value, which is well above the return of many other investment vehicles. Housing Investment Mistakes to Avoid

Like most investments, however, real estate is not without expenses and challenges. There are six housing investment mistakes you should avoid in order to make the greatest gains on your real estate.

Know the difference between a cheap deal and a good deal. Just because you can buy a home for a rock-bottom price does not mean you can rent it out. Homes in less desirable areas aren't any more appealing to renters than they are to buyers. Check out the neighborhood before buying. Find out what the rent is on other properties in the area.

Realizing what you can charge for rent on your Washington, DC property is only the first step in finding out if your investment is viable. You should also factor in the costs of buying, repairing, and maintaining your investment. You'll also need to consider closing costs, which normally run between 2.75-3.5%.

Keep in mind that the old adage “time is money” definitely applies to real estate. When your Washington, DC property is empty, you're losing money. The longer the period of time your property is vacant, the more it is costing you. This is because you are still paying for maintaining the property but not generating any income.

Be careful about assuming that you can just sit back and collect all that rent money. In order to attract new tenants or retain the ones you have, you'll need to provide routine maintenance on your Washington, DC property. You'll want to make sure that the plumbing, heating, and electrical equipment are always working properly.

Your Washington, DC property will need repairs just like any other home. For example, you may find that you need to repaint and do a very thorough cleaning after every tenant and fix normal wear and tear on the property. It is a good idea to set aside six months of expense money for repair work.

Another thing you should be aware of is that owning a Washington, DC rental property is different than owning your own home. There may be minor flaws in a home which you can overlook that a tenant would not. You also need to understand and adhere to state and local laws pertaining to landlords.

Investing in property in Washington, DC can be a profitable venture. One of the keys to realizing profits on your real estate investment is to keep in mind the potential risks and costs associated with being a landlord.

Rachel Valentino and her team at Valentino & Associates at Keller Williams are experts in buying and selling real estate in the Greater Washington, DC area. Contact Rachel's Team today for all of your real estate needs.