Brickop, Properties

First-time property buyers

Did you grow up watching shows about house "flippers", or ads in which ordinary people shared stories about making millions with no money down!!!real estate purchases? If you're like us, you know these schemes are unrealistic for the average investor. And like many first-time property buyers, you wonder how it's possible to purchase income property with mortgage rates so high, especially for non-owner-occupied units. Do you go out and jump on the first cheap deal you can find, or subscribe to bank auction alerts? Do you hold your nose and take high-interest loans on properties that just need a "few months of elbow grease"? 

You want to get in on the market now before values increase, but not at the expense of making mistakes. These are common pitfalls our investors avoid when building their real estate investment portfolio with BrickOp:

  1. Lack of objectivity

Sometimes, potential investors let their emotions sway important decisions—from purchases to tenant management. Your goal is finding a property that meets all the qualities of a good real estate investment. With most investment strategies, you'll rent the unit rather than make it your own home. Features that may appeal to your personal aesthetic probably won't matter to or work for a potential tenant in your target market. 

  1. Not doing thorough market research

Most residential real estate agents don't understand housing markets the way as a real estate investor should. They may be able to tell you about comparable sales in the neighborhood and sell you on the great school district, but that's not enough. When you're hunting for the right investment property, you need to understand property values and current and upcoming influences on a neighborhood (ordinances, district boundaries, crime, transportation improvements, etc).

To whom are you marketing your rentals? What's important to that demographic? Are the property's amenities and upgrades worth the purchase price, and necessary to your market? You want a building that will increase in value in scale with the neighborhood, not be the most expensive property on the block. 

  1. Overestimating cash flow

Real estate investment is a long game. If you purchase a vacant property, it might be months before you find a suitable tenant... and turnover is a risk inherent to rental property owners, especially those who aren't working with a management team. If a property has no reliable rental history, and a property buyer isn't savvy about the local housing market, they might overextend themselves at the time of purchase or when the unit's due for upgrades.

Income forecasting sets aside "emergency" funds on top of budgeted amounts for turnover expenses, vacancies, scheduled and unscheduled maintenance, taxes, and insurance... and, of course, mortgage payments. 

  1. Failure to inspect the property from roof to foundation

"Surprise" is a dirty word to property investors, which is why thorough examinations by professional property inspectors are essential to risk management and budget planning, and provide negotiation points for final costs at closing. Having a contractor friend crawl around with a flashlight isn't enough. A professional inspector may bring in specialists to help identify problems that can cost you thousands down the road:

  • Energy "leaks"
  • Radon
  • Deteriorating water and sewer lines
  • Building code compliance
  • Property line verification
  • Potential or existing pest problems, including significant termite damage
  • Foundation issues (water, poor construction, lack of reinforcement)
  • Roof leaks
  • Dry rot
  • Mold

Buyers who ignore their due diligence obligations or opt for the lowest-cost inspection service always regret it when they're faced with unexpected and costly repairs, turnover from or compensation to unhappy renters, and noncompliance penalties.

  1. Underestimating the investment of personal time

It's one thing to enjoy gardening and basic home improvements. It's another to experience the reality of weekend and middle-of-the-night plumbing emergencies, or the time involved in finding, onboarding and retaining good tenants. Property management professionals are worth their fees. They're up-to-date on tax codes, tenancy laws, marketing trends, and maintenance scheduling. They have relationships and clout with reputable trade professionals who will handle routine and unexpected projects, getting the job done right the first time—often for less. 

At BrickOp, We've Done the Work For You

Our income property investment opportunities offer you turnkey properties selected for the best potential value growth, and our property management partners look after your interests at unbeatable rates. BrickOp allows you to invest like a pro, with a support team that's out of reach of most first-time independent investors. Contact us to see our existing properties, and to learn about a unique investment model that makes "passive real estate income" a reality, rather than a buzz phrase. 

Tags: investment, administrates, beginner
Pecos Flat

Pecos Flats Condo

Denver, Colorado

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Pecos Flats Condos is the ultimate opportunity for rental property income!

Get started in the real estate investment business today while units are still available.

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Get started in the real estate investment business today while units are still available.