10 Features You Definitely Don't Want in Your First Investment Property

There are a lot of factors to consider when purchasing your first investment property, including less-than-ideal features that could lead to difficulty renting the property or costly expenses down the road.

So you know what to avoid, here are 10 features you should stay away from in your first investment property.

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As counterintuitive as it may seem, for investments, it's wise to be somewhere in the middle in terms of house size, updates, features, and so forth.

When you own the biggest, fanciest house in the neighborhood, you will not get the value out of the sale for the money you put into it. Better to find a house that fits the neighborhood's norm, with mid-range home prices being the goal.

ALSO READ: 3 Really Bad Reasons to Buy a House

While a homeowners association (HOA) may seem like a good idea, HOAs can lead to a host of problems for an investment property. HOA fees can be several hundred dollars per month, which can eat into any rental profit and include loads of restrictions that can make renting difficult, if not impossible.

Carpet is a more cost-effective flooring option, but it's not exactly the most hygienic or durable, making it a less-than-ideal feature in an investment property. Many people have environmental, health, and longevity concerns, which could make it a hard sell when it comes time to rent. Instead, opt for wood or a quality wood alternative for the biggest impact.

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Although they can potentially increase your sales value if you plan to flip the home or be a nice draw if you plan to rent it as a short-term vacation rental, pools or hot tubs can also be a big liability. The maintenance is expensive, and repairs are frequent. For long-term rentals, it's best to steer clear of pools or jacuzzis in most cases.

If you're considering investing in areas that require additional homeowners insurance or are highly susceptible to catastrophic natural events like fires, hurricanes, or earthquakes, you need to have a really solid understanding of the numbers for your investment before you buy.

Insurance providers can and do make considerable increases in premiums on a consistent basis. If your profit margin is only a couple hundred dollars a month, a single rate hike could wipe that out.

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Adding square footage can be helpful, but it typically does not outweigh the functionality of having a garage. A functional garage is often a highly sought-after feature for parking cars or organizing life's extra stuff. Conversions can also be done poorly, leaving awkward step-downs or possibly without pulling permits, which can lead to trouble down the road.

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A well-completed basement is certainly an appealing feature for renters or buyers later on when it's time to sell. The problem is recuperating the costs, let alone turning a profit. Basement conversions can be very costly, and it's typical to only get around half your money back from the remodel when it comes time to sell.

If the basement is already converted, make sure the job was done well. Basements are notorious for leaks or mold, which could be an expensive repair for you down the road.

It might look great for pictures, but landscaping can be incredibly expensive to install and maintain. If you're holding the property as a rental, it's quite likely the renter will not keep it up. And if your plan is to manage it yourself, it will be a significant cost each month to have a landscaper attend to it.

Even if you're flipping, too extravagant a design could actually turn people off because they don't have the time or money it requires to maintain it. Less can be more when it comes to landscaping.

ALSO READ: 4 Reasons Your Home Isn't Selling in a Seller's Market

It's only a good idea to upgrade plumbing, wiring, heater, and so on if it's actually necessary or needs imminent replacement. The primary reason is that it's hard to get the value back out of the cost of replacement or repair.

Obviously, if the home won't pass a 4-point inspection, by all means, spend the money you have to. Otherwise, only do what is necessary to keep the property in a safe, liveable, and sellable condition.

ALSO READ: 4 Questions to Ask Before You Waive a Home Inspection

New windows can be an attractive feature, but you won't get your money back from the initial investment in most cases. Windows can cost tens of thousands of dollars to replace, so most investors opt to replace a window only if it is broken or in need of immediate repair.

If you do choose to replace windows, you'll get more money back by switching to vinyl than sticking with wood if that's what the home has.

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Avoiding these features can not only help save you headaches but also make the difference between turning a profit or taking a loss. But none of these features should be seen as complete deal-breakers.

Weigh the cost, rely on a trusted inspector to help you determine potential problems down the road, and spend your money where it matters most.

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