Getting involved with your first real estate investment is exciting and scary at the same time. You know that real estate is a great opportunity but you just can’t help but feel nervous this first time. That’s perfectly normal of course but if you do your homework properly there’s a good chance that all will work out in the end. Here are the 3 big steps that you need to take before you make that first commitment.
Like any good business strategy 90% of the battle is won in the planning stage, not during the actual work in progress. Your first decision to make is to determine what type of investment you want to get involved in? Do you want to buy a fixer upper that you can resell fast for a quick profit? Maybe you’re looking for a long term investment that will take longer to recoup your investment but will provide cash flow for many years to come? If this is the case than you might consider renting out a house or buying a home that you can hold on to for a while to sell for a bigger profit. Offering a rent to own deal is also a possibility.
The main consideration here is how quickly you need to get your investment back. Regardless of what type of investment is best for you just be sure it makes sense for the area that you will be investing in. Research will help you to determine which strategy may or may not work in a given area and with a little common sense and patience it will soon become obvious what will work in a specific area.
Get your finances figured out. Now that you have a definite idea of what you are going to do it’s time to get your money in order. The time has come to determine just how much you can afford (and are willing) to invest. Make sure that you include the necessary cash that is required such as a down payment on a property, the closing costs, money needed for renovations and everything else that you intend to do. I recommend adding 20% to the total after you figure out what you think you will need. An unfinished investment yields a 0% return and there are always unexpected expenses that even the most experienced investor can not anticipate. If this means buying a lesser property than you had hoped, so be it.
Believe me; it’s better to have money left over at the end of the project than to go broke halfway through. That’s the most common mistake that first time investors make and it will definitely put an early end to your real estate career.
Don’t even think of going it alone. No successful business got where it is without a good team and that’s exactly what you will need to invest in real estate. I suggest that your first step is to find the right real estate agent to help you find exactly what it is you are looking for. If you can’t find the right property in the right area you have already lost the battle and an experienced agent can guide you to precisely where you need to be. Depending upon what your investment strategy involves you may also need the services of a real estate attorney, a mortgage company, an accountant, a property manager, a home inspector, an insurance broker and even an accountant.
I can’t stress strongly enough that having a professional team can make all the difference in the world as to your success or failure. An experienced real estate agent will be able to recommend many of these service providers to you and save you a lot of time and trouble. Remember what I said earlier? Planning is the key to success in business and this is a major part of the groundwork that needs to be done before you invest a single dollar of your hard earned money.