There are several key mistakes that people often make when investing in Illinois real estate. Avoiding properties that require substantial repairs, and assembling a team of professionals like a real estate lawyer, a property management company, and a real estate agent can help buyers succeed. The following are some of the more common mistakes that investors should keep in mind before engaging in any transaction.
Investing in a Property That Requires Substantial Maintenance
Before investing in any property, investors need to consider the costs of repairs and maintenance and how they can affect profitability. Even if the demand is greater than the supply, and prolonged periods of vacancy aren’t necessarily a concern, it’s important for the property to be well-maintained and conducive to habitation for renters. Repairs and maintenance will always influence the startup cost, as they require both time and money.
Neglecting to Work with Management Companies
Many investors in commercial or residential real estate may find themselves handling multiple properties across several cities. In the process, it can be easy to become overwhelmed without the help of a management company. Management companies can assist with managing property to serve tenants, organize and schedule rent payments, develop plans for repairs, and cover other services.
It’s important to negotiate with management companies early on before investing, as investors may wind up spending more if they wait too long.
Not Heeding the Laws in Place for Illinois Real Estate
The laws set for rental and lease agreements in Illinois could differ greatly from those in other states. To better gauge how the laws will impact an investment in Illinois, many real estate investors work with a reputable real estate attorney who will be able to provide legal advice.
Overestimating Prospective Revenue
Investors should take the time to figure out what a property is truly worth before investing. Oftentimes, less experienced buyers may go into an investment with the misconception that a property is worth more than it actually is. If an investor plans on investing in several properties throughout multiple cities, even a seemingly small difference in the markets can lead to drastic fluctuations in return on investment.
Understanding the true value of a property and other factors that can influence profitability can ensure that investors make informed decisions.
