How to Avoid Getting Burned in a Real Estate Transaction

When it comes to growing your wealth, investing your money, especially in real estate, is one of the best and safest ways to increase your money. However, being one of the safest methods doesn’t mean that doing so is inherently risk free. There are many ways that you can be duped or scammed into losing money, but there are also risks you could bring upon yourself. With everything that goes into investing, protect yourself against loss by being aware of some of the easiest ways that you can get burned in a real estate investment deal and preparing yourself against them.

• Never, ever hand over unsecured money.
• One of the easiest ways to lose your money is to plain old hand it over to someone. Say you stumble upon a once-in-a-lifetime bargain on your dream house, and in your haste to secure the property you hand over money without any real assurance or security on your end. Suddenly, the seller has vanished, you find out the property was never even actually listed by the owners, and now you’re out thousands of dollars on top of everything. Before you ever let any money leave your hands (or your account) have some sort of security so you know you won’t get burned.

• Do your own research.
• Before you start looking to invest in a property, find an area whose real estate will be lucrative and have a good potential of yielding high returns without too expensive of an investment. You also want to make sure that you have third party appraisers and home inspectors on hand for every step of the process. Although it might be easier to have the seller handle all of these things, especially if they offer, you want to have an unbiased person who will make sure that you’re both being treated fairly and receiving the best deal.

• Be realistic about the repairs.
• When you see a property that’s a good bargain, it can be easy to see the potential profit at your fingertips and gloss right over the expected repair costs. Before you even consider purchasing a property, make sure you have an understanding of approximately how much it will cost to get the property “up and running,” so to speak. While unexpected expenses are a part of every property renovation, having an accurate estimation of what the repairs will cost helps you make sure you don’t run out of money halfway through your project.

The Importance of Property Managers

It’s no secret that investing in real estate can be a great way to increase your wealth and keep your nest egg safe. However, owning real estate, especially a rental property, comes with a lot of work. Whether or not you have tenants, you’re going to need to stay on top of repairs and maintenance and figure out a way to make your mortgage payments if you aren’t collecting rent. Suddenly, your side investment to earn you extra cash is a full-time job that could end up costing you money in the long run. If you don’t have time to take care of all of the aspects of your investment by yourself, chances are that you could benefit from the services of a property management company. Here are just a few of the reasons why property managers can take the stress out of handling a rental property.

• You have someone keeping an eye on your investment.
• If real estate investing isn’t your day job — which it likely isn’t — then you’re going to need some help taking care of the day to day aspects of owning a rental property. Property managers will handle routine inspections, deal with maintenance requests, collect the monthly rent, and field any emergency phone calls from tenants that would otherwise come to you. They’re responsible for inspecting the property after each tenant moves out and readying it for the next one. Basically, they will oversee most aspects of your rental and handle any problems that may arise.

• You’ll fill empty properties faster.
• Aside from taking care of your property and managing your tenants, property managers are also responsible for advertising your rental and finding someone to fill the vacancy. Why is it important to fill vacancies as soon as possible? Every month your property goes unrented is a month that you’re responsible for paying the cost of owning the property and netting negative dollars. Filling the property promptly will minimize any payments that you’ll be responsible for each month.
• You’ll have someone to screen your potential tenants.
• One of the riskiest and potentially most costly aspects of owning a rental property is opening yourself to the possibility of legal setbacks when dealing with particularly unsavory tenants. A good property manager will know what to look for to avoid any potential scams and will be able to sport tenant red flags, helping you find only responsible, reliable tenants who will take care of your investment and pay their rent on time.

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