Reasons Why People Regret Buying Investment Real Estate

They Didn't Research the Location

Looking for investment real estate, and you won’t get anywhere by skimping on location research. At some point, we’ve all heard real estate pros repeat the mantra “Location, location, location,” and as it turns out, they have very good reason to do so. While size and overall condition of the property are undeniable factors, its location plays an extremely important role in determining true value — and how much money it can bring to investors.

So, regardless of how impressed you are with a particular property, it's essential to put in effort for basic location research. To determine what demand exists for housing in the area, you'll need to consider several factors — chief among them: local rental rates, home prices, and average income. This research will give you a solid understanding of how much you can earn from the property and may help prevent you from making an expensive mistake. Investors in Florida seeking a nice place to buy quality investment real estate should pay attention to the Bradenton, Florida real estate market.

They Didn't Account for Local Property Prices

As mentioned above, local property prices should heavily influence your location research. Studying local pricing can be useful for two reasons. First, it allows you to see how much similar properties sell for, giving you the knowledge needed to offer a fair price. Second, it effectively protects you from overcharging sellers.

If you find that comparable properties are selling much cheaper, you have every right to ask the seller what makes their property special. Moreover, if the seller gives an unacceptable explanation — or no explanation at all — you should seriously consider walking away from the deal.

They Didn't Work with Certified Inspectors

Purchasing investment real estate without formal inspection represents a huge risk. Given how much capital such an investment requires, this is a risky decision that no one should take lightly. Therefore, regardless of how confident you are in the property's condition or how many personal inspections you've done, it’s crucial to work with a certified real estate inspector.

First and foremost, inspection by a certified professional may be required to secure property insurance. Additionally, no matter how thoroughly you personally inspected the property, there are many issues that can escape an amateur. Therefore, any investor who wants a complete picture of where their money is going should insist on pre-purchase property inspection.

Inspection results can also help you determine what offer amount to make on the property. For example, if an inspector uncovers multiple issues you weren’t aware of, consider deducting the cumulative cost to fix these problems from your offer. If the seller doesn’t agree, it might be better to focus on more well-maintained properties.

Well-maintained real estate in a high-demand housing area can significantly improve your financial outlook. However, such properties don't make up the majority of investment opportunities available, and if you make a mistake by assuming one investment property is as good as any other, you could end up with buyer's remorse. Therefore, to ensure your first investment property doesn't become a purchase you regret, thoroughly study the basics of poor investment decisions.