Not Waiting for Payments to Clear – Never give your tenant buyers the keys before their deposit upfront payment, first month’s rent, and security deposit clears the bank. Either have them bring it to you in cash or a bank draft, rather than a cheque.
Renting to Friends & Family – Sometimes this can be fantastic, but, in most cases, it’s not!
Not Training Your Tenants – Set the tone right from the very beginning, and train your tenants about the rules of the game. They must always pay on time. Have a booklet prepared for them, if necessary.
Failing to Verify Details – Monitor the details of all transactions or have your team ensure all the details are looked after. This includes credit checks, the way the leases are signed and making sure the property manager is looking after everything.
Being Cheap – People often try to save a penny and end up losing a dollar. Again, don’t scrimp. Make sure that you’re marketing properly. Make sure the repair jobs are getting done properly.
Not Investing in Real Estate – Perhaps you didn’t even make it through the first one or you got through the first investment, felt comfortable and then stopped. Remember what your parents or grandparents said about their home? What if they had bought just two more houses? Think about yourself in 30 years.
Failing to Follow up With Possible Tenants – Let’s assume you have picked the perfect tenant buyer. If you have found another great tenant buyer, find another property for them. Possibly you don’t own a property for the tenant/buyer. How about negotiating a lease option with a seller? They can’t sell their property. You have the perfect tenant buyer. Create a sandwiched lease option that way both you and the seller can benefit. Plus, you now have some forced appreciation. Take a look at lease options and see what you can do. You don’t always have to own the property – you simply have to control the property.
Being Greedy – When you’re buying a property, don’t be stepping over the dollars to pick up the dimes. Sometimes, we see investors chiseling away, trying to save $1000 off the purchase price. What you should be doing is focusing on the value you’re receiving by investing in that property.
Ultimately, saving one or two thousand dollars off the purchase price may be an ego boost. But if you let a great opportunity slip away, you may regret it five years down the road.
You may look back in five years and think, “Oh my goodness. That $5000, that $10,000, that $2000… What was the real cost to me?” In other words, don’t get too greedy.