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Real estate investing can be incredibly profitable if you go about it successfully. However, some major pitfalls can sabotage your success in this area. Read on to find out what they are and how to avoid them below. 

Not Accessing The Tax Advantages You Are Eligible For 

Lots of people don’t realize that as a real estate investor, you could be eligible for a wide range of tax benefits and advantages. Of course, not making use of these will impact how successful and profitable your real estate investing can be. 

With that in mind, it’s important to check the tax advantages and benefits in your country and local area for real estate investors. Some that may be available to you could include deductions from your mortgage interest for your investment property. You also may be able to write off or claim for your operating expenses, and deductions for depreciation for improvements in buildings. 

Some local areas even have special schemes in place to make property investing even more attractive so we are sure to do your due diligence if you want to maximize your profits in this area.

Getting Stuck With An Investment Property You Can’t Sell 

One of the biggest pitfalls of real estate investing is being stuck with a property that you struggle to sell. After all, you cannot access the value of this property until you sell it. This means you can end up with a huge amount of capital tied up, which means you can miss out on other opportunities. 

Fortunately, there are ways around this problem. One is to take out a second mortgage that will allow you to release some of the value of your property to invest elsewhere. Although this can be complicated, and you will need to account for interest rates and pay off this mortgage along with your initial one when you come to sell. 

Another option is to work with a house sale cash service, which will buy your property quickly with a cash offer. The best cash house sale services only require an initial phone call and a quick inspection before they offer you a great price. This means you can access the value of your property quickly and easily.

Not Carefully Vetting Tenants For A Buy-To-Let Property 

Many property investments are bought with buy-to-let in mind. This means once the property has been purchased, the owner then leases it out to tenants. This allows them to collect a rental fee as a return each month. Combined with the value of the property when they come to sell it, this can provide a good level of returns. 

However, there is a major problem with purchasing a property for buy-to-let, and it’s that you don’t always know how people will behave once they have moved in. Indeed, if you fail to properly vet potential tenants when they move in they could end up doing a lot of damage to the building and so devalue your property.

Of course, the deposit that you take at the beginning of the rental agreement is designed to cover this. Although it’s not unheard of that the damage done is far more than the original deposit amount. To that end, it’s vital that you properly vet any tenants before allowing them to move in. 

To vet tenants, you can use a property management company that will collect references and do the correct checks for you. Alternatively, you can do these checks yourself, but be sure to get at least two referees who can demonstrate that a tenant will be responsible and treat your property with respect.

Not Properly Maintaining Your Property 

Another major pitfall of property investing is not properly maintaining your property. Unfortunately, if you allow your property to fall into disrepair, then its overall value when you come to sell it will decrease. It will also be harder to rent out. 

With that in mind, you must always keep some money aside for property maintenance. This could include exterior maintenance such as removing trees to stop subsidence, replacing old and rotten window frames, or redoing driveways. It could also include interior maintenance such as painting the walls and ceiling, replacing appliances, and maintaining the hot water boiler.

Getting Into Debt To Keep Your Property 

Last of all, some property investors make the major mistake of getting into debt to keep their property. We’re not talking about the original mortgage here, but additional debts taken on to maintain and cover the costs of running the property. 

This is so problematic because such investors can easily find themselves out of pocket doing this, as they continue to charge the same to their tenants. Indeed, because most loans and credit come with large amounts of associated interest, the balance of your investment can quickly become distorted, leaving you owing more than you will reap.