A Guide to Finding the Right Investment Property
To succeed at being a landlord you need to find the right property.
Below is a guide to help you get started on your path to creating long term wealth.
Finding the right property will not only give you peace of mind but provide income for years to come.
Staying away from problem properties and those that are potential "money pits" is very important,especially when first starting out.
Typically, newbies do not have a lot of room for error.
You need to first decide if you want to look for rental property yourself or find someone who can help you, such as a real estate broker or agent.
You can do a mixture of the two, there is no harm in that, but you need to know what you are doing as far as contacts, etc.
There are many good advantages of working with a reputable broker or real estate agent, especially one who specializes in investment property.
You will want one who understands what to look for in investment property, it is a much different beast than purchasing your own home.
Brokers and real estate agents may have inside information and be aware of properties that just came on the market, they can be an invaluable resource.
Be certain they understand basic real estate finance;capitalization rates, gross rent multipliers, etc.
You would not believe the real estate agents that I have worked with that have no idea what these numbers are, let alone how to use them.
Before you go shopping for properties, be sure that you have your finances in order.
One of the worst things you can is waste a broker's time when you really can't afford to be purchasing anything or already have financing in place.
Do yourself and them a favor and have your money lined up to pay for the property before you call them to look at something you are interested in.
Be sure you know your credit score and how much money you are approved for in case you the property is more than you anticipated.
Knowing what you can afford will help everyone and make things run a lot smoother.
You do not want to be in a position where you find somewhere you want to invest in then have difficult getting financing.
If you cannot get financed you have just wasted a lot of people's valuable time.
I am a stickler on people NOT wasting MY time,so I try not to waste theirs.
I don't go shopping unless I have the financing lined up.
Make sure you do your research in the area that you plan on investing.
It is probably best to invest in a property that is within 15 or 20 minutes driving time from where you live.
You don't want to drive one hour more or spend a lot of time in the car just to deal with problems and show units.
You want to make sure you do not overpay for property and it provides enough cash flow to provide a profit, though it does not necessarily have to have a positive cash flow,just soit pays the mortgage and other expenses.
Be very careful about purchasing a fixer upper home.
You may not be prepared financially or mentally to dive into such as project.
It can get out of control very quickly.
Our short sale rehab project that we are just completingwas supposed to be 25K max but it ended up being almost 40K.
So if we did not have the money available it could have been a bad situation.
Be sure you can finish what you start.
If you have money tied up in something and can't generate revenue, it puts you in a bad situation.
You always want to make sure you have the property inspected before you put in an offer purchase the property.
You can use the information to haggle on the price and get it at a discount.
We have always been glad that we purchased a property inspection report for our units, it is valuable information but can be expensive.
We paid a minimum of $300 to have one unit inspected, but it is very thorough.
You also want to take the time to research the neighborhood and be certain that you can easily rent the unit.
What if the house or building is in the middle of drug war zone? You may have trouble renting it.
Stop by your local police station to see if what kind of neighborhood it is as well as your city hall to see if there are any changes coming to the area that you need to be aware of.
Do not make the mistake of rushing into a house and settling simply because you want to hurry and invest in real estate.
Do your homework and due diligence, it will pay off in the long run.
Below is a guide to help you get started on your path to creating long term wealth.
Finding the right property will not only give you peace of mind but provide income for years to come.
Staying away from problem properties and those that are potential "money pits" is very important,especially when first starting out.
Typically, newbies do not have a lot of room for error.
You need to first decide if you want to look for rental property yourself or find someone who can help you, such as a real estate broker or agent.
You can do a mixture of the two, there is no harm in that, but you need to know what you are doing as far as contacts, etc.
There are many good advantages of working with a reputable broker or real estate agent, especially one who specializes in investment property.
You will want one who understands what to look for in investment property, it is a much different beast than purchasing your own home.
Brokers and real estate agents may have inside information and be aware of properties that just came on the market, they can be an invaluable resource.
Be certain they understand basic real estate finance;capitalization rates, gross rent multipliers, etc.
You would not believe the real estate agents that I have worked with that have no idea what these numbers are, let alone how to use them.
Before you go shopping for properties, be sure that you have your finances in order.
One of the worst things you can is waste a broker's time when you really can't afford to be purchasing anything or already have financing in place.
Do yourself and them a favor and have your money lined up to pay for the property before you call them to look at something you are interested in.
Be sure you know your credit score and how much money you are approved for in case you the property is more than you anticipated.
Knowing what you can afford will help everyone and make things run a lot smoother.
You do not want to be in a position where you find somewhere you want to invest in then have difficult getting financing.
If you cannot get financed you have just wasted a lot of people's valuable time.
I am a stickler on people NOT wasting MY time,so I try not to waste theirs.
I don't go shopping unless I have the financing lined up.
Make sure you do your research in the area that you plan on investing.
It is probably best to invest in a property that is within 15 or 20 minutes driving time from where you live.
You don't want to drive one hour more or spend a lot of time in the car just to deal with problems and show units.
You want to make sure you do not overpay for property and it provides enough cash flow to provide a profit, though it does not necessarily have to have a positive cash flow,just soit pays the mortgage and other expenses.
Be very careful about purchasing a fixer upper home.
You may not be prepared financially or mentally to dive into such as project.
It can get out of control very quickly.
Our short sale rehab project that we are just completingwas supposed to be 25K max but it ended up being almost 40K.
So if we did not have the money available it could have been a bad situation.
Be sure you can finish what you start.
If you have money tied up in something and can't generate revenue, it puts you in a bad situation.
You always want to make sure you have the property inspected before you put in an offer purchase the property.
You can use the information to haggle on the price and get it at a discount.
We have always been glad that we purchased a property inspection report for our units, it is valuable information but can be expensive.
We paid a minimum of $300 to have one unit inspected, but it is very thorough.
You also want to take the time to research the neighborhood and be certain that you can easily rent the unit.
What if the house or building is in the middle of drug war zone? You may have trouble renting it.
Stop by your local police station to see if what kind of neighborhood it is as well as your city hall to see if there are any changes coming to the area that you need to be aware of.
Do not make the mistake of rushing into a house and settling simply because you want to hurry and invest in real estate.
Do your homework and due diligence, it will pay off in the long run.
