Even experienced investors can find themselves making simple mistakes. No matter how prepared and knowledgeable you are, there are some most common pitfalls that come with property investments in Dallas-Fort Worth.
If you want to avoid those lurking pitfalls, you’ll need to be strategic and intentional. This can be a challenge in a competitive market that’s moving so quickly. The best advice we can give to investors is this:
- Know your goals.
- Put together an action plan that will help you reach those goals.
- Always surround yourself with professionals who can support you and provide experience and resources.
Let’s talk about some of the most common pitfalls that are a risk for everyone – new investors and experienced rental property owners. Don’t let them derail your investment plans.
Buying the Wrong Dallas-Fort Worth Investment Property
A common pitfall is an underpriced property that needs a lot of work.
Unless your investment goals are to identify distressed properties and turn them into high-quality rental homes, avoid those properties that need a lot of work.
Not only will you have to spend a lot of money renovating the home, but you’ll also waste a lot of time. As the months drag on, you won’t be earning any rental income. Fixer-uppers come with a lower purchase price, but you lose a lot of money in extended vacancies. When you’re investing, look for homes that are in good condition and need cosmetic updates only.
Deferred and Unreported Maintenance
Not responding to maintenance needs right away, not preparing for long-term repairs and replacements, and neglecting to make the needed upgrades on rental properties can be some common pitfalls that are easily avoided.
Preventative maintenance will protect the condition of your asset and ensure you’re not overpaying for larger repairs later. Those routine fixes need to be addressed right away. And, it’s important to keep your property modern and attractive by making upgrades and updates that keep you competitive in the market.
Routine maintenance and preventative maintenance are no-brainers. Don’t let yourself settle for an outdated and deteriorating property. Bring your rental home up to the standards of a competitive market.
Pricing Pitfalls and Dallas-Fort Worth Rental Homes
It’s easy to overprice a rental home, especially now, when the market demands high rents.
The rental value will depend on:
- The market conditions and your competition
- Your property’s location
- Your property’s size and condition
Get to know the market and do a comparative analysis so you know where your property fits in. Underpricing is dangerous because you leave money on the table and it takes you a while to catch up. Overpricing is even worse because it means additional vacancy days. You cannot recoup the money you lose on an empty rental property.
Always Budget for Variable and Fixed Expenses
Forgetting certain expenses associated with rental property can be a big pitfall.
There will always be costs associated with leasing, maintaining, and managing a rental property. In fact, those costs will likely be more than you expect – so plan for that. We often encounter investors who forgot to factor in the cost of vacancy or tenant turnovers.
You’ll have to pay property taxes and insurance. Make sure that you do some budgeting that includes all these expenses you’re not anticipating. An eviction, for example, isn’t likely, but you should still have a reserve fund for potential legal issues and tenant disputes.
There are dozens more pitfalls we can talk about. If you’d like some help making smart investment decisions and avoiding the most common mistakes that investors make, please contact us at Assign Property Management. We’d love to serve as your Dallas-Fort Worth property management resource.