The first mistake they make is doing what 95% of mums and dads investors do which is buy a property and rely on and wait for it to increase with capital growth. What you should be doing is buying something you can also “force value” on by either renovating, extending, sub-dividing, or demolishing and building a multi-unit site.
I agree entirely. I am a “cash flow” investor. It is nice if my properties appreciate in time, but that is not the fundamental aspect of my business plan. I get homes that I can increase their value quickly, not for flipping, but for renting and managing. I add rent-multipliers to the house. For example, a Hunter ceiling fan costs me $120, and it increases the rent by $10/month. So it is paid back in full, by the renter, in one year. After that - pure gravy. Other easy rent-multipliers include landscaping, light fixtures, and paint. Just be careful to not overdue. Keep your eye on the goal with every expenditure. They need to be either a required expenditure (e.g. broken door), or an actual investment that will have a very-real payback for you. You are not trying to create a palace; you’ll go broke doing that. You are increasing your rent potential. On my first rental property, I put too much money into it. I will not make that mistake again.
Here’s another trap to not fall into: Be prepared to say “no” to tenants with unreasonable requests. Example: I have a tenant who wanted to use the dining room as a TV lounge. No problem. I am indifferent. But he asked me to run electrical cabling and a new outlet to accommodate the placement of his TV. I told him that I would allow that, but that the cost would be his. Turned out he wasn’t that enthusiastic about having his TV in that room. The same tenant provided his own washer and dryer, because I have hook-ups. The old drain on my house was overflowing from the washer discharge, so I provided a utility sink to restrict the flow, and I included a faucet on the sink for cold water. It cost me about $130. That was reasonable for me to bear that cost, because I advertised the place as having hook-ups. That sink will last 50+ years. When he moves out I may purchase a scratch-and-dent washer and dryer set for $1000 and increase the rent by $30/month. That is 3 years to recoup my investment. That is a long time-frame, but it also provides the advantage of making the house more marketable. Right now that’s not a major concern for me, because in Toledo, OH it is a landlord’s market (not enough rentals). But I’m holding onto that idea if the situation changes.