10 PITFALLS TO AVOID WHEN BUYING AN INVESTMENT PROPERTY

Buying an investment property always requires care and thought. At Swartz Commercial Real Estate we have extensive experience to help you make a decision that is right for you.

We will help you through every step of the process from finding the right property for your investment parameters through the negotiations and escrow processes and even after you own the property. We can help advise you through every step and if you need help that we cannot give you we will help you find the right expert professional.

Even after you purchase the property we are always available to help with property management issues that may arise. We won't abandon you when the escrow closes. We like long term relationships and will work hard to develop and keep them.

1. Don't start looking for investments before you decide on how much cash you wish to invest. The price range of the property that you will purchase revolves around the cash invested.
2. Don't jump into real estate investing without knowing what kind of property works best for you. Some people wish the lower returns but safer prospects of apartment buildings. Some people would rather have lower management with industrial properties. Others will feel there are more opportunities in office or retail buildings. We can help you decide if you are unsure.
3. Do you know the current interest rates and terms for the type of property that you wish to invest in? Current interest rates will have a great deal to do with the ultimate cash flow you can expect from a property.
4. Don't rush into a purchase without giving deciding how you will take title. Will you take title personally? With your spouse? As an LLC? As a partnership? If you wish the extra protection of another entity it makes sense to form it in advance of submitting offers on properties.
5. Don't rush to buy a property without knowing something about it's location. Do you mind driving an hour to your property? How about 2 hours? How about getting on an airplane?
6. Don't jump into an investment property without knowing your property management capabilities and expertise. If you have none you need to think about getting professional management. It is a good idea to decide how the property will be managed before you buy it and by whom.
7. Don't sign a legally binding Offer to Purchase without understanding what it says. You need to understand your rights, the Seller's rights, the contingencies to purchase and the time frames in which you need to act.
8. Don't try to save money by not fully inspecting the property. If you hire a professional inspection service you must read and understand their report. The Seller is not going to fix all that the report mentions. Much of it will not need repairing or replacing until some time in the future. However, you need to understand whether the problems are serious or not and the future cost of fixing the situation.
9. Don't buy a property without knowing your investment goals. Are you expecting to purchase a property to make some quick improvements, increase rental income and sell or will you be keeping your investment for long into the future? Is immediate cash flow critical to you or is long term growth and appreciation your goal?
10. Don't ignore the importance of doing financial projections. When you calculate the cost of operating the property have you taken into account the new and higher property tax bill you will most likely be receiving? Have you calculated the cost of insurance to you rather than to the current owner? Have you planned enough money for maintenance, repairs and loss prevention?

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