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Purchasing a property to rent out is very different than buying a home to live in. While the basics of it are the same, there are many common mistakes first-time real estate investors make merely because they aren’t aware of the process. If you’re thinking about purchasing a house to become a rental, be sure to avoid these three mistakes.


Forgetting the home inspection

In a hurry to buy the perfect home, you may be tempted just to forgo the home inspection. If everything looks great, then what’s the need? This is a mistake that can cost you thousands. A home inspection reveals all of the repairs that need to be made to a property. Without the inspection, you have no idea what needs to be done, which means you can’t run your numbers properly. It’s essential to know how much repairs will cost to determine if the property is a good deal. Plus, you may be able to get the seller to cover a portion of the repair costs during negotiations, but only if you know what needs to be done in the first place.


Not running the numbers

It’s easy to get caught up in the excitement of buying your first investment property when thinking about all of the benefits it will bring to you. In this excitement, you may forget to actually crunch the numbers on the property. Not every piece of property is a good investment, and some houses don’t make any sense at any price point. Before completing the purchase, you need to estimate mortgage payments, insurance, taxes, ongoing maintenance costs, upfront repair costs and any other expenses. Be sure to account for every expense you may experience such as vacancies and capital expenditures.


Not properly screening tenants

Before purchasing your rental property, you want to make sure that you have a plan to vet and screen potential tenants. Bad renters aren’t going to tell you of any issues upfront, so it can be hard to spot any possible problems. You should run both a credit check and criminal background check on all applicants. Two other red flags are tenants who want to move in immediately and those who want to pay for the year upfront. Someone who wants to move in right away may be getting evicted from their current place, or could just be someone who plans things very poorly. A tenant that pays upfront may just be looking for a way to ensure you don’t come to the property very often or could be someone who manages money poorly and wants to pay ahead of time while they have it available.