Property Management Blog

Avoiding Real Estate Investor Pitfalls in Long Beach, CA

System - Friday, December 6, 2019

Avoiding Real Estate Investor Pitfalls in Long Beach, CA Article Banner

Even experienced real estate investors make mistakes once in a while. As long as the mistakes aren’t too expensive and you learn from them quickly, most of them can be overcome without a huge loss of time or money. Today, we’re shining a bright light on some of the most common pitfalls we see investors in Long Beach make when they’re buying, selling, and renting out real estate.

The Idea You’ll Get Rich Quick

Investors who enter the real estate market with the idea that they’ll make millions flipping houses and driving up rent are in for a huge disappointment. Residential real estate is not going to get you rich within months of your investment. You have to be willing to play the long game. To really earn any type of return on your rental investment, you can expect to hold and rent out your property for at least five or 10 years, maybe even longer if you really want to earn some serious money.

Rental homes are not going to have huge cash flow margins, especially not right away. Smart investors realize that it’s still a good investment if a tenant is paying some part of your mortgage and expenses every month. Don’t fall for the get-rich-quick schemes – this isn’t that kind of business.

Forgetting to Budget for Costs

Renting out property is a great way to build wealth and collect assets. However, you must remember that there will be costs involved in renting out and maintaining a property. We often run into investors who forgot to factor in the cost of vacancy or tenant turnovers. Or, they don’t think about the costs involved in routine maintenance issues and even emergencies. You’ll have to pay property taxes and insurance. Make sure that you do some budgeting that includes all these expenses you’re not anticipating. An eviction, for example, isn’t likely, but you should still have a reserve fund for potential legal issues and tenant claims.

Not Thinking Like a Tenant

A common pitfall is trying to buy a home you’d like to live in. As an investor, you have to remember you’re not house hunting for yourself. You’re looking for a property that tenants will find appealing. This might mean it’s close to good schools or within walking distance to the grocery store. Maybe it has an outdoor space or large closets that are great for storage. Think like a tenant thinks. Don’t worry about stainless steel appliances and tile floors. Tenants want a safe, well-maintained home that’s comfortable and priced right.

Staying Close to Home

Don’t make the mistake of investing in your own backyard all the time. You don’t have to be in Long Beach in order to invest in Long Beach. You can live in San Francisco or Denver or even China. With all of the technology we now have available and outstanding opportunities in markets like ours, you should think big and invest wherever it makes sense.

Doing it All Yourself

Man holding his head - thumbnailA huge pitfall that investors rarely see coming is the stress and loss that can come with managing your investment property on your own. You would never pull your own tooth – there are dentists for that. Take advantage of the professional advice that’s available from brokers, lawyers, insurance agents, and property managers. Talk to us about your investment goals. We can help you manage your property effectively, resulting in lower expenses and higher profits. Unless you have the time, resources, and tools available to manage your own rental property, hire the best managers you can find, and let it all fall into place.

We’d love to talk to you more about how to avoid some of the more common investment pitfalls. Contact us today at CMC Realty.