5 Common Mistakes in Real Estate Investing

Real estate

Real estate investmentIf you are new to real estate investing, you likely know that it can produce the greatest rate of return and a path to financial independence. But what you should know is that the learning curve in this industry is quite intensive and requires a great deal of planning and preparation. Oftentimes, it’s the lending side of real estate investing that most people find intimidating. Here are five common mistakes to avoid as first-time investors.

Underestimating Costs

Whether you are flipping a home or prepping a property for rental, it’s important to get a precise estimate of the repair and renovation costs. It’s not uncommon for new investors to run up “surprise” expenses that significantly drive up the costs and affect the overall profitability of the investment home.


Over-improving means putting more money into a home than you can get in return. For instance, a home may never be worth more than a certain amount of money regardless of whether you add more high-end features and finishes because the location may not be as good. When improving on a home, consider looking at nearby “comps” to see how much buyers are willing to pay for a home with similar upgrades and square footage.

Overestimating Rental Income

Overestimating rental income is another common issue. While researching comparable homes in the area can help you understand rental prices for the home you are renting out, you should keep in mind that vacancy periods may significantly impact your profitability, which is contingent on being able to attract and retain tenants. In addition, rising taxes, utilities and insurance costs can cancel out profits from a stagnated rent.

Failing to Do Proper Due Diligence

In real estate, the period of time known as due diligence is the opportunity to investigate facts about the physical and financial conditions of the property and area the property is located in. Due diligence involves – among other things – walking the property, reviewing documents, conducting inspections, and calculating numbers such as insurance, taxes, and rental values.

Overlooking the Need for Training

As a budding real estate investor, the more training you receive, the less likely you are to commit costly mistakes along your journey. Training can come in a variety of forms, such as books, seminars, and coaching sessions. At Ridge Lending Group, our focus is almost exclusively on the non-owner-occupied sector of lending. We believe investment education is key and take great pride in piloting first-time investors through the waters of their first property.

Call RLG today to continue this discussion and to learn how our financial experts can help grow your business

Pros and Cons of Being a Landlord


LandlordRentals are the most common way to get started in real estate investing. Renting an investment property will generate passive income over a long period of time and provide the means for you to reinvest into additional real estate purchases and expand your portfolio. But as with any venture, there are a number of pros and cons you should consider before you purchase a rental home. Here’s what you need to know about being a landlord.



The ability to earn passive income is what draws many investors to rental properties. Be sure the rent you charge is enough to cover expenses, such as mortgage payments and maintenance costs, while ideally making a profit.

Tax Advantages

Landlords may benefit from a slew of tax deductions available for investment properties, including business deductions, the cost of property, depreciation, and mortgage interest.


When you hold on to a value-increasing property, you are building equity and creating financial security. Not only do you benefit from the income produced from rent but also from the future appreciation of the property. A double blessing!



Though rentals are great sources of passive income, they demand a lot of attention and involve multiple steps that are anything but passive. Some of your workload will include marketing your property, screening applicants, communicating with tenants, coordinating repairs and maintenance work, collecting rent, and filing eviction when needed.

If you own more than one property, consider hiring a property management company to handle the day-to-day operations of your rental homes as tasks will inevitably pile up.


Just as the tenant must take good care of the property, the landlord has also a set of obligations toward tenants, such as providing a safe and habitable living space. This means adhering to all building codes, performing necessary repairs, maintaining common areas, and keep utilities in working order.

If you fail to comply, a tenant can take legal action against you. Make sure you know what your obligations are regarding both the law and the lease agreement.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more.

Selling a Property with Tenant Still Inside? Here’s What You Need to Know!

Selling tenant-occupied home

Selling tenant-occupied homeSelling a property for a profit can sometimes be a tall order that involves costly renovations, marketing, and real estate savvy. But if you are trying to list a home with tenants still living inside, it can be even more challenging.

While selling a tenant-occupied property is completely legal, the new buyer must honor any existing rental agreement that had been signed by the previous owner. If your tenants have six more months on the contract when the property is transferred, that means the tenants should be allowed to stay for the remainder of time stipulated in the lease.

Communicate With Your Tenants

Be upfront with your tenants about your intention to put the property on the market and what that will entail. Explain the legal obligations of the new owner to honor the existing rental agreement and let them know about the possibility that the new owner may not want to re-up the lease or charge more once the rental agreement ends.

The sooner you disclose the information and the more open you are about the process, the more time your tenants will have to make necessary arrangements and the more likely it is they will be accommodating about showings.

Give Your Tenants Advance Notice

If no written lease exists (for example, when tenants pay the rent month by month), most states require a landlord to give tenants at least one month’s notice of the sale so they have time to relocate if needed. When it comes to longer-term rentals, landlords will typically be required to notify tenants that they do not intend to renew their lease no less than 60 days prior to the lease end date.

Schedule Showings

If you have been transparent with your tenants and cultivated a good relationship, viewings will likely be much easier to set up. Be considerate about the tenants’ schedule and tactful in your approach as they may have the right to refuse viewings. In addition, landlords must inform tenants of a visitor with at least 24 hours in advance.

Get an Inspection Done

It is a good idea to get a fresh inspection done before you start scheduling showings. As tenants rotate in and out, the property might not be in the same condition as before. An inspector can identify problems that need to be addressed prior to listing, so you can save time during the contingency period.

Are you interested in learning more about real estate investing? RLG would love to help you find a suitable investment strategy for your goals! Call us today to learn more!

6 Essential Things to Know About Insurance Policies


InsuranceIf you are in the market for home insurance, there are a few things to consider beyond price and affordability. Factors such as the type of dwelling you own and coverage you need are equally important when shopping around for the best policy.

Most commonly, you will find three types of property policies: comprehensive, named perils, and broad policies. Following is an overview of each of these policies.

Comprehensive: a comprehensive policy will cover all risks to your home and possessions, except those specifically excluded from the list. Frequently excluded perils from a comprehensive policy include earthquake, flooding, pollution, and other natural disasters.

Named Perils: contrary to a comprehensive insurance, a named perils insurance contract only covers the perils specifically named in the policy. An example may be an insurance contract that specifies losses due to fire or theft.

Broad Policy: in essence, a broad policy is a combination of the comprehensive and named perils policies.

When it comes to coverage, there are basically three different levels:

Actual Cash Value: Actual cash value covers the cost of the house plus the value of your belongings after deducting depreciation. Under this option, if you were to put in a claim for a used item, you would receive an amount in return equal to the value in its current condition, and not how much you paid for it.

Replacement Cost: Replacement cost covers the actual cash value of your home and possessions without the deduction for depreciation, so you would be able to repair or rebuild your home up to the original value.

Guaranteed Replacement Value: A guaranteed (or extended) replacement value policy covers whatever the cost is to rebuild or repair your home – even if it’s more than your policy limit. This is the most comprehensive coverage as it accounts for increased replacement costs and provides homeowners with wiggle room in case construction prices rise.

Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!

How to Conduct Due Diligence on Out-of-State Properties

Due diligence

Due diligenceEvery seasoned real estate investor will tell you that performing due diligence is key to making a sound financial investment. If you are adding out-of-state properties to your portfolio, doing an effective due diligence can be all the more challenging. But first, what is due diligence?

In real estate, the period of time known as due diligence is the opportunity to investigate facts about the physical and financial conditions of the property and area the property is located in. Put simply, it is the time to do your homework before deciding to move forward with the purchase.

While the time window is negotiated prior to the execution of the contract, it typically ranges from 14 to 30 days. As for when the clock starts ticking, that will vary from state to state, which is why it’s important to consult with a local real estate expert. In some states, you enter the so-called due diligence period as soon as both parties sign the contract.

Deciding on a time frame will require factoring in the amount of time needed to schedule appointments with inspectors and to review the paperwork such as HOA rules and regulations. Note that, unless negotiated otherwise, all inspections are paid for by the buyer.

We gathered some helpful tips if you are eyeing a property outside of your state:

Talk to the local county assessor: though an exact figure isn’t possible unless the property sells, the county assessor can provide ballpark estimate of the tax values of properties you are considering as well as surrounding homes.

Check pro-forma numbers: make sure to verify every number you are provided, such as insurance, rental values, and taxes. For example, if the property is in a disaster-prone area, this can significantly add to insurance costs.

Use online resources: use online platforms such as Zillow and Google Maps to your advantage. In addition to getting a better grasp of average rental values and asking prices, sources such as Google Street View may give you a good sense of the neighborhood where the property is located. Some websites will also allow you to check prices of nearby homes – just keep in mind that renovations and square footage will all affect the home’s value, so it’s important to compare similar homes.

Inquire about renovations: if the property you are considering needs repairs or a remodel, ask contractors to give you an idea of the scope of work, completion dates, and pricing.

Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and save you time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!

Converting Your Property to a Short-Term Rental

Beach rental

Beach rentalWhether you have a mountain cabin, a beach house, or a downtown condo, renting out a second home is an excellent way to generate passive income. One of the greatest advantages to short-term rentals is the flexibility it allows. Owners can block off calendar periods that they want to keep free for personal use and set fluctuating rates based on the season to maximize profits.

Before you dive right into it, it’s important to know a few things.

Check Regulations

The first thing you should do before you get your property ready for short-term rental is to check any rules and regulations in your area. Depending on where your property is located, you may need to apply for a license and observe certain limitations. In addition, make sure to check whether any HOA restrictions exist on rental properties.

Set a Budget

Because of the high turnover, vacation rentals require a great deal of maintenance and upgrades. If your home is not outfitted for short-term rentals, you will need to take the time to make the appropriate changes and set a budget for any needed renovations.

Remember to account for every expense you incur on the property, including utilities, cleaning costs, consumables (toiletries and toilet tissues), repairs, furnishings, entertainment package (cable and Wi-Fi), and advertising plans.

Prep the Space

Walk around the space and take note of anything you anticipate your guests might need as well as potential issues they might encounter. Some basic utilities for a comfortable stay include electricity, water, heating, air conditioning, plumbing, and Wi-Fi.

A few other things to consider are storage space, kitchenware, appliances, cleaning supplies, toiletries, paper tissues, bedding, trash bags, place settings, coat hangers, and more. A good idea is to make an inventory checklist. You may also want to keep some essential items in plain sight.

Determine the Rent

Your asking price will ultimately come down to factors such as your property’s current market value and location. Most property owners will charge anything from 0.8 to 1.1 percent of their house’s market value for each month. Make sure to check rental prices of comparable homes nearby and factor in any service fees charged by platforms such as Airbnb and VRBO when applicable.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more.

What to Know When Choosing a Property Management Company

Property Management

Property ManagementProperty management companies are a necessity for many real estate investors with larger portfolios and out-of-state properties. These companies help take some of the workload off investors’ shoulders and free up the time for investors to focus on growing their businesses rather than dealing with the hassle of being a landlord.

Property managers will typically be in charge of all tenant-landlord interactions and day-to-day operations. Some of the services property managers provide may include marketing your rentals, conducting background checks on tenants, collecting rent, handling maintenance and repairs, addressing tenant complaints, and pursuing evictions.

Hiring a property management company has many advantages, so it is important to choose a reputable, experienced company. Following are some considerations to bear in mind when selecting the right property manager for your properties.


Many real estate professionals, including property managers, are accredited by professional bodies and government agencies. Make sure to look up the credentials of staff members and owners. Professionals within the real estate industry are more likely to know the ins and outs of the rental process and provide insights on potential repairs and improvements to ensure the property is up to snuff.

Online Presence

A good reputation online and within their offered references is key, so a good place to start your research is through the internet. Search for property managers from the area where your property is located and check out their ratings and reviews online.


An accountable property manager is one that is responsive and organized. As part of their duties, property managers are expected to furnish landlords with regular reporting, including tenancy reports, financial reports, and other ad-hoc reports.

A tenancy report should contain timely updates on occupancy, turnover rate, and pending notices. A financial report, in turn, should detail expenses and revenue, including rent collected, agency fees as well other service fees. In addition, managers should be able to address in writing any requests for information on an ad-hoc basis.

Services Provided

A company that offers a wide range of services related to your business should be at the forefront of your list. After all, the reason to contract out the management services is to give you peace of mind.

Make sure the companies you are researching provide the following services at a minimum:

  • Property Maintenance and Repairs: property managers must have an extensive network of reputable contractors to conduct repairs, improvements, and maintenance work needed to retain tenants.
  • Funds Management: rent collection, banking, and remission should be part of the agreement.
  • Marketing Services: Ask to see a vacancy posting as well as any brochures and marketing material. Things to consider are a strong social media/online presence, professional photography, and compliant language in the advertisements.
  • Tenancy Screening: Ask how the company runs background checks, verify payments, and stay in compliance with existing regulations in order to secure high-quality tenants.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more.

The 5 Most Common (and Effective) Real Estate Investment Strategies

Real estate investing

Real estate investingThere’s no doubt real estate investing is one of the best wealth building strategies of all time, allowing investors to rake in six or more figures with a solid portfolio. In addition to building wealth, there are a number of tax advantages investors benefit from.

If you are ready to see it for yourself and hit the market, following are some common – yet highly effective – real estate investment strategies.


If you are new to real estate investing, know that it’s never too late to get your foot in the door. For your first purchase, consider starting with less expensive wholesale properties. Wholesaling is the process through which the wholesaler contracts a home—usually one that is distressed—with a seller, shops that home around to potential buyers, and then assigns the contract to one of them.

Wholesaling is a less risky method for new investors as it does not require a significant amount of capital to get started. A good rule of thumb is to have a solid list of potential buyers prior to making an initial offer to the seller.

Fix-and-Flip Properties

Flipping property is all the rage with both individual and institutional investors. Turn on any home or DIY network or browse social media platforms and you will undoubtedly find thousands of folks showcasing their home flips.

Investors typically buy a property at a discount because of its condition. This strategy not only brings tremendous potential for profit but also a great deal of satisfaction from seeing through a makeover.

The best piece of advice here is to understand the costs and process and to have a sound grasp of your local real estate market so you can recognize a good deal and confidently project how much the property can sell for. Overall, an investor should pay no more than 70% of the after-repair value (ARV) of a property minus the repairs needed. The ARV is what a home is worth after it is fully repaired.


While flipping houses provides quicker returns on your investment, renting an investment property can provide passive income over a long period of time. The key to success is to be able to retain high-quality tenants and regularly maintain the property. If you don’t want to deal with the hassle that comes with being a landlord, you can hire a property management company to take care of everything – from screening potential tenants to completing any repairs and maintenance needed.


A real estate investment trust (REIT) is a publicly traded entity that owns, operates, or finances income-generating real estate. By putting your money into a REIT, you are essentially buying a tiny piece of a portfolio owned by a corporation (or trust). As their portfolio appreciates, the trust pays out dividends to the investors.

Relative to other investment options, REITs are far less time-consuming and labor-intensive and may generate steady income stream for investors. On the flipside, they offer little in the way of capital appreciation.

BRRR Investing

The BRRR Method, which stands for “Buy, Rehab, Rent, Refinance,” is one of these buzzwords that is often thrown around in the real estate industry. Notwithstanding the hype, this strategy can yield great returns on investment. Simply put, BRRR boils down to adding enough value to a property to recover the money you invested in it. This, in turn, allows you to take the money and use it to buy more properties. Over time, you will be able to build a real estate portfolio that gives you complete financial independence.

Are you interested in learning more about real estate investing? RLG would love to help you find a suitable investment strategy for your goals! Call us today to learn more!

5 Simple Ways to Succeed in the Real Estate Business

Real estate

Real estateReal estate investors can make serious money through rental income, appreciation, and profits. And as they build equity, they are able to leverage it to buy additional properties and increase their wealth even more.

But as with any form of investment, there are some challenges and risks. That’s why having an investment strategy is key to avoiding potential money pits and reducing volatilities. If you are ready to dive into real estate investing, following are some tips to start off on the right foot:

Set Goals

Make sure you have your short-term and long-term goals clearly stated in a business plan. The investment model best suited for you really depends on why you are in real estate investing and for how long you plan to keep the property. As you build your portfolio, you should always assess whether or not the property you are eyeing fits these goals.

Understand Local Market

Understanding the local market not only allows you to get a general idea of what’s going on now, but also to reasonably forecast what the housing market will look like over the next few years. There are a number of factors that affect the market, including supply and demand, mortgage rates, and the economy.

When new construction has been sluggish and supply limited, you have what’s known as a seller’s market. In this environment, sellers have the upper hand with multiple offers over asking. On the other hand, when there are plenty of homes on the market, it could be a great time to buy as you may secure lower prices.

In addition, lower mortgage rates tend to boost demand as financing becomes cheaper and more people can afford homes. Lastly, a strong economy that boasts high employment rates and wage growth will foster healthy demand and cause prices to go up. 

Make Updates

Home renovations can be an effective way to add value to your investment properties. While some renovations may instantly increase your home’s value, others may not be worth the upfront expense, so it’s important to keep things simple and practical.

Here are some common renovation areas:

  • Adding an extra bedroom or bathroom
  • Giving the inside of the home a fresh coat of paint
  • Upgrading the kitchen
  • Enhancing the curb appeal
  • Creating an exterior entertaining area

Hire a Property Manager

As your real estate portfolio continues to grow, so does the amount of time you will need to dedicate to managing the properties. As they begin to scale, many real estate investors will hire a property management team to handle daily operations. This frees up their time to focus on researching, networking, and closing more deals.

Stay on Top of Real Estate Trends

While the real estate business still involves quite a bit of networking and word of mouth, it would be unwise to discount the use of technology in this day and age. Make sure to arm yourself with the latest apps and tech stack. This may include AI-assisted pricing tools, targeted ads and virtual tours, for example.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more!

Can a New Roof Increase Your Investment Home’s Value?


RoofHome improvements are a great way to boost your home’s value, rent income as well as the quality of life for potential tenants and homebuyers. But not every home renovation will bring in revenue, so it’s important for real estate investors to know which ones offer more bang for their buck. Replacing an old roof, for one, is a renovation project with a potentially high return on investment (ROI).

New roofing can be very appealing to homebuyers because home roofs should be replaced around every 20 years. Adding a new roof on your investment home can provide a return of 107% on average, according to data released by the National Association of the Remodeling Industry (NARI). What’s more, Remodeling Magazine’s Cost vs. Value Report found that a new roof with asphalt shingles can increase the property’s resale value by a national average of $17,147 in 2021.

If you are flipping houses, this could be a worthwhile investment that could increase the chances of selling them faster and with higher profit margins. Apart from aesthetic gains, a new roof is a feature that improves the home’s overall energy efficiency. Because it reflects heat and acts as an insulator, homebuyers stand to benefit from lower utility costs.

Signs Your Investment Property Needs a New Roof

Generally, the roof should be replaced every 20 years, but it may need to be done sooner if any of these signs become apparent:

  • Curled, cracked or bubbled shingles
  • Missing shingles
  • Shingles covered with moss or algae
  • Shingles granules in your gutter

Best Roofing Materials

Roofing materials come in a variety of textures and colors, giving homeowners an opportunity to better complement their siding and landscaping. The most common (and more affordable) material is asphalt shingles. In addition to their affordability, asphalt shingles are relatively easy to install and highly durable.

To determine whether replacing your property’s roof makes sense from a financial standpoint, make sure to factor in things such as the price of comparable homes with new roofs in the area and costs associated with the renovation. Not only will the materials affect the final price, but also the size of the roof, number of shingles layers, and other system components.

Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!