Are you buying an investment property? Are you a first time investor? Oftentimes, buyers who are new to investing are fearful of making errors that will cost them larger sums of money than the investment itself.
Understand that buying investment property is a complex business decision not to be taken lightly. You should study this in-depth prior to taking any action, and you should seek professional help from your attorney, accountant, real-estate agent, and mortgage financing expert. That said, it is always good to have a plan in mind before you start looking for help with your property investments.
Choose the type of Property: Single Family vs Multi Family
Choose an area.
Tip: When you investigate an area, get copies of the local newspapers and the city newsletters for the last few years so that you will be aware of things that are happening that may affect the value of properties. Changes in the laws, land use planning, zoning changes and many other things can change the value. Talk to people in the community to find out what issues are being discussed. Talk to other investment property owners to find out how the community relates to landlords. Due diligence in
Choose a location within the community that can support your income goals. Research property values and rents.
This information is available from real estate agents, as well as from a variety of other services in most areas. You will want to call rental ads in the paper and talk to local landlords about what they are offering, how much they are charging, and what their experience is with the market. Some of them may be open to selling their property and may even be willing to finance it, so be sure to ask.
List the criteria an investment will need to meet in order for you to be interested.
Find a competent real estate agent that is in the area, knowledgeable about investment property, and willing to work.
Make sure you get referrals. Interview agents before you choose one.
Analyze the property.
When you find a potential property, gather all of the data that you need to determine the seller's motivation, what it will rent for, what the expenses will be, and who pays for what.
Research financing options.
Financing investment properties could be challenging if you do not have any or little money to put down. You need to know your investment property finance rates are typically based on your credit score so it would be good for you to check your current score prior to proceeding further
Make an offer.
Hopefully, you will find the perfect property investment and will receive adequate financing. At that point, you will have successfully become a property investor and it is time to enjoy your new-found wealth through your income property, whether building your future retirement or supplementing your existing income.