Mistakes first time Rental Home investors make

KEY WEST, Fla. - Nov. 24, 2014 - PRLog -- Per Fred Mullins, Top Producing Member of Team Mullins at Coldwell Banker Schmitt, "One of biggest mistakes that first time property investors make is making too many assumptions about what a Rental Home will need to get ready for tenants and how much can be charged per month. This can turn what is intended to be a sound investment into a money pit.

What to Do Before Purchasing a Rental Home

Setting a budget is the very first item on your list. Knowing how much you can spend is key to success. Once you know, do yourself a favor and stay at least 10 to 20 percent under your comfort zone for contingencies, because these are practically inevitable.

Research each home you’re considering, checking with the local clerk of the court’s office and the local building permitting agency. Those are the places you’ll find things like liens and unpermitted work, in addition to any other encumbrances.

The next step of the process entails bringing-in a contractor, a home inspector, and a pest inspector. These are especially important if you’re purchasing a bank-owned property, foreclosure, or short sale. These professionals will alert you to any defects and give you an estimate of the cost to remodel or rehabilitate, whatever might be necessary.

Why Pest Inspections for Investment Properties are so Important

Some property investors do bring-in a home inspector, then a contractor, but stop short of hiring a pest inspector. These investors mistakenly believe that this is enough to detect pest problems, but that, unfortunately, isn’t the case.

Here’s why you need an experience pest inspector:

Structural concerns. Though a contractor might see signs of pest damage, he’s unlikely to know the extent and even what insects and/or rodents have caused said damage. The more information you have, the better and knowing precisely what you’re dealing with will prevent unpleasant surprises from popping-up later on.
Electrical components. Pests can do serious damage to electrical wiring and other components. In some instances, the damage is so slight it might escape the eye of an inexperience individual. What’s more, there are some instances when damage caused by a pest can be mistaken for something else.
Pest infestations. When people think of the term “pest infestation,” they conjure-up images in their minds of creepy crawlies scaling up and down the walls or taking over an attic or crawl space. While that can be the case, infestations have to start somewhere and they can be quite subtle.

The good thing about having a home inspector and pest inspector on your side is to be alerted to any problems. If you find the home is in good condition, that’s great, but, if you learn of problems, you now have a negotiation tool and also know the cost of repairs.

Fred Mullins has more than 16 years of cross functional experience in real estate, international asset management and construction management. He has been a part of the management team for several Fortune 100 companies, including AT&T, Visa, FPL and C. B. Richard Ellis.

His responsibilities have included real estate / property management portfolios of more than 9 million square ft. and international responsibilities in more than 10 countries.

Fred holds an MBA, B.S., real estate license, mortgage broker’s license, USCG Master Captains license and commercial pilot’s license and is the owner of www.lowerkeys-homes.com serving the lower Florida Keys.