Cell: 218-851-4013
Office: 218-825-3394
Toll Free: 800-284-1777
Fax: 218-828-1130
eric@ericpopp.com
514 South 6th ST
Brainerd, MN 56401
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Sixteen Mistakes Investors Can Avoid by Working With Eric Popp
- Not determining what your goal is:
Talk to your real estate agent about cash flow, capital appreciation, tax benefits, ease of management, equity pay down, or pride of ownership (sometimes these items are mutually exclusive).
- Believing the seller's or the seller's agent's numbers:
Check everything: rent income, taxes, expenses, deposits, lease expirations, etc. Hype is an epidemic in investment real estate.
- Not joining your local apartment association:
The best local source of forms, pending laws, procedures, and education on investment property besides Eric Popp marketing team.
- Forgetting you're buying a business:
Owning an investment property carries with it great responsibility and potential, along with the very difficult decisions -- evicting tenants, who to rent to, whether or not to make that improvement, etc. Remember it's not hands off investment. It’s easy to forget this during times of high appreciation!
- Being emotional:
An emotional purchase is not always your best investment. Pay attention to the numbers, not necessarily to your heart.
- Buying negative cash flow:
Unless you KNOW there will be constant appreciation, don't buy investment property that eats like an alligator — it's no fun! It may cause you pain and force a sale before the benefits of appreciation can be seen. Talk to Eric about his 40% expense ratio!
- Agreeing to balloon payments:
Here is a stress inducer -- long term investment goals financed with short term instruments: a classic investment mistake. I have always believed you should own real estate for the long term; with long-term real estate investments, you find long term financing.
- Not doing a thorough inspection:
Look at every system! Hire a professional inspector and ask the tenants questions about the property. Don’t get lazy on this one!
- Not getting estoppel letters:
Get letters from tenants confirming the statistics of tenancy. Make sure their story agrees with seller's interpretation. Ask hard questions. If the seller won’t give Eric the answers, we will get them from the tenants!
- Inspect, approve, and confirm all documents after the close:
Get the building permits, zoning laws, rental applications and leases, by laws, easements, title policy, mineral leases, inspection reports, purchase contract, insurance, rules and regulations, note, trust deed, mortgage, etc.
- Not getting a bill of sale:
There are many different types of personal property (appliances and fixtures, for example) involved in an investment sale. Make sure you know who owns the pieces of personal property then prove you do after the close.
- Have adequate insurance at close:
Get a professional insurance agent to make sure you are covered! Tenants and their guests bring liabilities!
- Treat your tenants as customers:
Vacancies and turnovers are your largest expense! Charge fair rents and attend to realistic tenant needs immediately.
- Not selecting qualified tenants from the start:
Check references from previous landlords, employers, bankers, and friends. Check credit, bank balances and judgments. Drive by where they currently live and stop in! A little work up front can save 95% of your problems later.
- Not renting right:
Too low rent costs money, but it can cut turnover and can decrease vacancies. High rent increases cash flow and the value of the building, but can increase the vacancy factor and turnover. Have Eric set the correct balance.
- Spending positive cash flow!
Remember, successful investors have free and clear properties! Apply your cash flow to the payment and speed up that amortization schedule!
These are the sixteen most common mistakes that investors often make but can easily avoid with a little foresight. An interview with Eric could easily reveal a few more that are unique to your situation! For other helpful tips about investing in real estate Contact us today. We will send you any information you need with absolutely no obligation.
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