When investing in real estate in New York City, it is common to think that you will turn a serious profit with a quick flip. Having that mentality has worked in the past but now more than ever it is important to have a long-term strategy in investing in real estate in New York City. The gains that you will receive normally come from solid real estate investment strategies which include increasing the value of your holdings by hiring a reputable New York City property manager. Hiring the right property management company will only enhance your ability in building equity and increasing passive income.
Quick returns as we have mentioned are rare. Many people go and come out of the real estate investment industry quickly because they never received the returns they were expecting or outright lost money. So what are some common mistakes that we see from first time real estate investors?
Purchasing a property you wouldn’t think is suitable for yourself
If you cannot imagine yourself living in the house you are considering purchasing then you shouldn’t. The question I always ask clients is “What if something catastrophic happens…would you live there?” If the answer to the question is no then the property isn’t the right fit for you. The goal on your purchase is to find something that tenants would be receptive to. If you are not that interested, than this would be a clear sign that you wouldn’t be as energetic into the investment.
Not having “rainy day” money for emergencies
There are many times that I have seen investors go into a transaction with zero reserves. This would put a strangle on your personally if you do this. You should account for basic monthly expenses as well as have a reserve on hand in the event of a unforeseen repair or expense. You should always take into account utilities expenses and general maintenance fees such as the property management and landscaping. You should also have a cash reserve fund in place in the event that a tenant decides not to pay rent for instance or the boiler needs an emergency repair. The failure to do this can result in potential withholding of rent. Also you will also have to tap into your personal money to fix such as a retirement account or credit card which will affect you and your family for potentially years.
At the end of the day, owning a rental property in New York City is nothing more than business. You should treat it that way and not let your emotions run your decisions. Sometime it can seem personal when you have tenants and they want to tell you their life stories for their failure to pay the rent. You have to be tough and always treat the managing of your property like your own business. A top-notch NYC property management company can assist you in staying on course with your objectives. They will also lighten your load and allow you to concentrate on other pressing issues that you may or may not have. This can result in shedding the burdens that you may have and allow you to purchase additional rental properties.
Addressing these common mistakes will help you along your way in being a successful real estate investor. Sure there are other variables at place in maximizing your returns but by focusing on the tips above will help you in achieving your long term goals.