Lately I’ve been thinking about the early days, when I first started investing in rental property. I remember the uncertainty I felt, the stress, and the challenges I faced as a newbie. I remember thinking, ‘wouldn’t it be nice to have a more experienced investor could tell me what I’m in for here?’
So that’s what I’m doing with this post. Here are 3 things I wish I would’ve known before buying my first property.
1.It takes time to find that perfect property. Once you’ve made the decision to invest, and you’ve done the research, and you’ve figured out your financing, it’s time to buy a property, right? Yes! But guess what? It could take weeks or even months before you find one that meets your criteria.
For me, this was incredibly frustrating. I was so ready to move on a deal, but with every property I looked at, it seemed like there was something wrong. The location wasn’t exactly where I wanted it, or the numbers weren’t adding up. Or worse, everything looked perfect, but another investor swooped in with a better offer. So frustrating!
I thought that locating a great rental property would be as easy as finding one online, visiting it, making an offer, and boom – it would be mine. Obviously this wasn’t the case, and my expectations were all wrong. I didn’t land my first deal until 4 months in – and it was a loooonnnggg 4 months. But, looking back, I’m so glad I waited and didn’t go with my knee-jerk r e i reaction to buy the first one that “sort of” fit my parameters, because it would have been a huge mistake.
2. People are animals who will trash your place. Oh boy…what an eye-opening experience it was to have my first truly horrible tenants. It was my own fault, too. In my naivete, I wasn’t as thorough as I should have been in my vetting process. I had done a standard background and employment check, but that was about it. I didn’t follow up on any references, and I didn’t check in as frequently as I should have after they moved in. In short, I trusted them, and that turned out to be a very costly mistake.
To put it mildly, my property was trashed. I’m talking holes in the walls, cigarette burns and stains on the carpet, cabinet doors ripped off, and busted tile in the bathroom. And don’t even get me started on the smell. I still have nightmares about it.
My point is, make sure you know who you’re renting to. Tick ALL the boxes when you’re vetting a prospective tenant, and for the love of God, ask for references and follow up on them. because it’s true, some people are animals, and they will destroy your property, and they won’t feel one iota of shame or guilt about it, either.
3. There will be highs and lows, and you MUST plan for this. Yeah, I know “highs and lows” sounds really generic, but it’s true. There will always be fluctuations in the housing market, and your profits will be impacted by them. But as an excitable, new investor getting into a hot market with seemingly unlimited profit potential, this fact can get tossed to the wayside. When all you’re seeing is dollar signs, it can be easy to overlook impending doom. You’re focused on building your portfolio and growing your rental empire, and that’s great, but you have to remember that things can quickly change in this industry.
Which is why it’s critical that you plan for the low times, from the moment you begin investing. There are a few ways you can do this: creating an an emergency account for surprise expenses, developing exit strategies for all your properties, and making sure each of your investments is carefully researched.