The real estate market in Spokane is extremely competitive right now. Yet, even though home prices are rising, Spokane is still very affordable when compared to Seattle. And homes in the area rent quickly, which is good news for investors. However, the challenge is that the properties that are for sale also go fast. So, you need to be able to make a swift decision if you want to purchase an investment property. Quick decisions can often lead to mistakes if you are not careful. To help you in this process, here the mistakes you’ll want to avoid when buying investment property in Spokane.
Basing Your Decision on Appreciation
Because property values in Spokane are on the rise, it is tempting to buy one with the expectation that it will continue to appreciate. While this may happen, it is a mistake to base your decision on this. The value of properties fluctuate and there is always the chance that you may need to sell in a down market. Instead, consider the cash flow that you will get from the property and know what you need to make out of it each month. Even in a competitive market, you should do a little investigative work first. If you are buying the property from another investor, find out its current rental rate to help you determine if it is a good fit for your portfolio.
Not Having a Thorough Inspection Done First
If you found a “deal” that seems too good to be true, there is always a chance that it is. No matter how anxious you are to pick up a bargain home, it may end up costing you more than you expected in the long run – if you rush through the inspection process. So, have a professional inspector thoroughly examine the home for potential issues before you commit to buying it. By knowing the property’s problems, you can choose to walk away or bargain for an even better price if you are willing to take them on. But either way, with an inspection you will know what you are working with and can make an informed decision.
Failing to Get Pre-Approved for the Loan
In a hot market like Spokane, where properties go fast, you need to be ready to make an offer when you find the property that you want. If you haven’t secured a loan, the seller may not take you seriously and move on to the next buyer. Plus, you need to know how much you can borrow. If you don’t know your limits, it is much more difficult to narrow down the field of prospective properties. So, get with a mortgage expert and do your due diligence before you look for a property to invest in.
Downplaying Your Expenses
A mistake that some investors make, especially those that are new to property investment, is not factoring in all the expenses involved in owning a rental property. In addition to the cost of buying the property, there are also taxes, neighborhood or association fees, and other ongoing expenses. Additionally, you can expect to spend money on repairs and maintenance. You may have upfront costs in order to prepare the property to rent. Things may happen while you have tenants such as the garbage disposal going out or plumbing issues that need addressing. You may need to replace flooring or paint the walls in between tenants. And while properties currently rent fast, there is no guarantee that yours will. You may have a month or two with no tenants. These can all add up and so you must be prepared for them.
Getting Attached to a Property
Always look at your investment properties as a business and approach your decisions that way. Just because a property feels right, reminds you of your childhood, or you connect with it in some other way, these are not reasons to buy. When you get emotionally involved with the property you can make rash decisions. And in an already fast-moving market like Spokane, this is a big mistake. So, take a step back, and remember to make sure that the property fits your budget and other requirements. If there is another prospective buyer, avoid getting into a bidding war just because your heart is set on the property (or you are too prideful to lose). Always think of it as business and walk away when you must. Something else will come along.