If you’re buying a house for the first time, then there are a number of common mistakes that you should be aware of in order to avoid. When talking about what not to do before buying a house, I will be summarizing the most important aspects throughout the process that you should be knowledgeable about in order to avoid making bad decisions.
This will include basic aspects, such as the knowledge and research that you need to make, or things like common financing challenges (like buying a house with credit card debt or buying a house and car at the same time).
So, let’s jump into the things you need to know before buying a house!
1) Knowledge is Key
What not to do before buying a house? Don’t do it without having the necessary knowledge.
This can include any type of knowledge that is relevant and crucial for the deal you’re making – from the basics of real estate to the more advanced aspects of it.
While this is such an obvious tip, it just can’t be emphasized enough how much difference it makes to buy a house when you have a lot of knowledge about real estate in general.
Learning about basic things like the different types of real estate properties, for example, can make the entire process of searching for and finding a house to buy much easier, and you will be much more able to identify the properties that you will actually be interested in based on their type, as well as enable you to narrow down your search and therefore reduce the amount it will take you to find a suitable house to buy.
For example, types of real estate properties can be categorized based on multiple aspects:
- Type of property: this is the actual type of the building, like single-family homes, multi-family homes, condos, apartments, townhouses…etc.
- Classification: this is related to the functionality or use of the property, like residential property, commercial property, industrial property, or even agricultural property.
- State of the property: this is related to the structural or legal state of the property, like distressed properties or foreclosed properties, for example.
Of course, you don’t need to know about all types of real estate properties if you’re only interested in one. However, if you don’t know what types of real estate properties exist, then how can you know if there are types out there that you might be interested in?
Additionally, most modern tools that you will be using when searching for the right property to buy will require you to know what type of property you’re looking for in order to help you find a suitable one. It will also help you explain to your real estate agent the exact properties you’re interested in.
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2) Do Your Research
Another one of the things not to do when buying a house is skipping the research step.
Before buying a house, research is a must!
But what kind of research do you need to make before you buy a real estate property?
The answer is: it depends on what you want to do with the property.
For example, if you’re simply buying a house to live in, then most of your research will be focused on the standard of living that the house is going to offer you in terms of its location and proximity to services and parks and stores…etc.
If you’re buying a house as an investment property, on the other hand, then your research will probably focus more on the financial aspects, such as the amount of rent that you will be able to charge and how that compares to the neighborhood or market that the property is in.
Basically, your research should revolve around whatever value you want to get from the property.
In the case of doing research for buying an investment property; there are many different types of researches and analysis that you can do, and it always depends on the type of strategy that you’re going to use.
This brings us to the next tip of what not to do before buying a house…
3) Know Your Strategy
Before buying a house to use as an investment property, you should first have an investment strategy in mind.
Buying a house with an investment strategy in mind can help you identify properties based on their strengths and weaknesses when it comes to your particular strategy.
This will also help you find better deals for the right reason – for example, you might find a house that has an average price, making it average for a buy-and-sell kind of investment. However, this same house might have the potential to generate an above-average rental income, making it a great option for doing a rental strategy.
That’s why it’s very important to have a general strategy in mind, even if only based on these categories:
- Rental strategy: buying a house and renting it out either short-term or long-term.
- Buy-and-Sell: buying a house and selling it once its price appreciates for a profit.
- Fix-and-Flip: buying a distressed property for a low price, fixing it, then selling it for a profit.
This, of course, ties to the previous tip of what not to do before buying a house, which involves doing your research based on the strategy that you want to use.
So, if you’re going to do a rental strategy for example, then your research should include the area’s rental rates, the rent per size, the occupancy rates, and several other aspects that will affect your income and expenses when it comes to your rental property.
Other things that you should include in your research are the types of tenants in the area, the maintenance costs, the availability of property management, and the laws and regulations that will apply to you.
This brings us to the next tip in things not to do when buying a house…
4) Services for Hire
The house you’re buying will be yours, but that doesn’t mean you have to go through the process alone.
Before buying a house, you should decide on the services that you want to hire to make the process much easier.
First and foremost, and in most cases, you will want to hire a real estate agent.
A real estate agent can tremendously help you throughout the entire process of buying a real estate property. A local agent will also be very knowledgeable about the area and will have access to listings and sellers that you might not otherwise have access to.
Of course, it is important to do your research and choose a real estate agent that you’re comfortable with and who has the right experience to help you. Additionally, make sure to find an agent that you can afford, as real estate agents can sometimes cost a lot, and that is something that you will need to include when planning your finances.
Read: 10 Benefits of Hiring a Real Estate Agent
There are other services that you can also hire to help you with different aspects of your investment, however.
For example, you might need legal aid at some point during the deal for handling legal papers…etc.
Additionally, and once you’re bought the property, you might want to consider hiring property management for a rental property or any other type of services that will help you run the place.
These are decisions that you might need to make prior to buying a house as they should also be included in your financial plan.
Speaking of which, when it comes to what not to do before buying a house, don’t do it without having a financial plan…
5) Plan Your Finances
Buying a house isn’t like buying groceries. It involves a much bigger amount of money and therefore requires a lot more financial planning.
Before buying a house, you want to include absolutely everything that will affect your finances in the short and long terms.
This means you should be aware of all the costs that are involved in buying a house as well as all the expenses that will incur once you own the house. Additionally, if you’re buying an investment property, you want to plan around the income that you expect the property to generate and any other methods that you can use to increase that income.
More importantly, you need to plan around your method of financing the purchase.
Are you going to buy the place in cash?
Very few people do that! In most cases, people borrow money from a bank or a private lender in order to finance their property.
But there are many types of loans and mortgages that you can use to achieve your goal. And it is very crucial that you’re aware of your options and that you pick one that works well with the property you’re buying, your personal finances, and the strategy you want to use.
If you’re buying a house and car at the same time, for example, you need to make sure that you will be able to afford both, or that you’re going to be able to make your mortgage payments on time and avoid accumulating additional debt.
Now, to the final tip of what not to do before buying a house, it’s something that will help you with all of the tips we’ve mentioned so far…
6) Use These Tools
What not to do before buying a house? Don’t be old-fashioned. It only makes things harder for you.
What I mean here is that the age of buying newspapers to see if there are any new houses for sale is gone. The time of spending hours using pen and paper to do endless calculations and comparative analytics is also gone.
If you’re buying a house or any other type of real estate, then you will probably want to use online tools to help you.
Nowadays, there’s a tool for anything that you can think of: from finding properties for sale, to hiring real estate agents, to analyzing and calculating real estate properties to see their investment potential.
And while these tools might be costly for some, especially if you’re planning to use all of them, I’m here to reassure you that you can find all of these tools and more in one place: Mashvisor.
Mashvisor is a real estate platform that offers a wide selection of tools that can help you throughout your entire process of buying a house to live in or as an investment.
If you’re new to real estate investing, you can start your journey with us by visiting our blog, which has thousands of articles about all things related to real estate investing. Using our basic and advanced guides, you can go from being a beginner investor to having all the knowledge you need to turn your first purchase into a success story.
Once you’re ready, you can start using the other tools that Mashvisor offers, such as the property finder tool that allows you to customize your search and use several filters to narrow down your search based on your own criteria and what you’re looking for.
You can also easily do your due research and analytics using the neighborhood analytics tool, property analytics, and property reports, which can all help you understand the market and the properties better in terms of their investment potential and projected returns.
Mashvisor’s investment property calculator can help you analyze any property that you’re interested in to see how it’s expected to perform in the short and long terms, and it will tell you which rental strategy is better to use for the property (traditional long-term rental vs Airbnb short-term rental).
What Not to Do Before Buying a House? Conclusion
So, what not to do before buying a house? It can all be summed up in the first tip, which is to not go in blind.
Arm yourself with the right knowledge and tools, and all the other steps will become easier for you to make the right decisions and close a good deal on a house that is suitable for you and your goals.
And make sure to use Mashvisor as it can help you tremendously and will greatly reduce the amount of time that the whole process takes from start to finish!