3 Mistakes That Will Cost You Money!

If you get pulled over for speeding in a construction zone, you can tell the police officer that you didn’t know it was a construction zone or that you didn’t know that you were speeding, but that doesn’t change the fact that you were. You are still going to get a ticket.

When you start investing in a new area of real estate, you need to find out what the rules are and where the pitfalls are before you start investing. Otherwise, you may find that you are making mistakes that you didn’t even know existed. Just because you didn’t know that it was a mistake, won’t change the fact that you lost money. This is one of the critical reasons you want to get as much education as you can before you buy your first property in a new area of real estate.

The first mistake that you can make is paying too much for a property. If you are buying in an area of real estate that you are not familiar with, you may not know what to expect with the pricing. You may think that you are getting a good deal on something because it is significantly less than your area, when in fact it is overpriced for its area. Always research each neighborhood that you are buying properties in. Make sure that you know what a typical CAP rate is for that city. Make sure that you know what rents and occupancy rates are for that area. You want to buy a property with upside potential. You won’t know if that property has upside potential if you don’t know these other factors too.

When you are planning on building or even renovating a property, one pitfall that you want to avoid is hiring cheap labor. While it is always tempting to save money by going with the lowest bid, there is often a reason why that bid came in lower than all the rest. Is that contractor reputable. Do they use licensed workers, or do they hire someone standing on the corner looking for a job that day? If they use the first person they can find, why do you think you will get a quality project.

Make sure that you always get references when you are working with someone new. You need to know if they complete projects on time. You need to know if they do quality finish work. You need to know if their construction team shows up and finishes on time. It will end up costing you a lot more money if you have to have someone else redo what they did poorly. Get multiple bids and go with the best reputation, especially when you are working with a new contractor in a new area.

Finally, always make sure that your property manager rents out a storage unit the exact same way!!!!! Make sure that they review the contract with the renter. Make sure that they show the property to the renter and verify that it is empty and that they are renting the correct unit. If they don’t rent the correct unit and you end up having to auction off their unit because that units’ renters aren’t paying rent, you may sell the wrong person’s belongings. There are court cases that show that you may end up losing a lot of money if you make this mistake. Always verify that you are auctioning the correct unit before you do. If you make a mistake, don’t try to deny it, or hide it. Show compassion and try to find a way to help your renters recover any items that were sold.

When you are meeting with your potential renters, verify the value of what they are storing. If you have a client that wants to store expensive items, make sure that you tell them that they are only allowed to store a certain amount in each unit. This is something that you may want to have initialed in your contract. This way if anything happens to the belongings in the unit, they cannot come back and say that they were worth more than the specified amount. You can always allow them to store higher value items if they request it, but it needs to be documented.

By knowing what pitfalls to avoid, you can save yourself money. If you don’t know what you are buying or who you are hiring to do the work on your property, you may end up spending a lot more money than you need to. On the other hand, with the proper training and knowledge you can make sure that you spend what you expect to spend on your self-storage properties. Train your managers so that they don’t rent out your storage units incorrectly. This can come back and create horrible problems if someone doesn’t pay their rent and you have to auction off a unit. Find ways to protect yourself as much as possible so that you can avoid costly mistakes. Get the training that you need. As always, happy investing.