There are various career fields for one to choose from when it comes to making an income, but some are better than others. For instance, the real estate field will always be a good one to get into because homes and buildings will always be in need. Many people attempt to get into the area of property investment as their career, while others do it on the side. Regardless of what you choose, below is a complete beginner’s guide to buying your first investment property and how to continue the trend to include numerous properties.
Properties Available For Purchase
The real estate market fluctuates from time to time, but this real estate market is currently at a high peak. Understanding the different areas of a given city or town is key in understanding the needs and demands regarding the homes, apartments and other varieties of living quarters. Below is a step-by-step guide to refer to when you decide to buy your first property investment and the different areas to consider.
Look At Your Financial Status
People look to get into real estate investment so that they can make more money and eventually make it their main income source. In order to do this, you need to know where you are regarding the ability to save money. For instance, if you do not have enough money to invest in a property, then a savings plan needs to be made so that you can start saving money to buy your first property.
Earn Extra Income
The average person does not have thousands of dollars lying around that they can use to buy a property. For those people, earning extra income is key. This can be done by renting out extra rooms in your home while keeping your day job. From there, learning the market is also important and can be accomplished by becoming a buyer’s agent or a leasing agent. Both positions will allow the individual to learn various aspects of the business while earning money.
Choose The Type Of Market You Would Like To Invest In
There are various markets to choose from regarding different properties, but some are much more expensive than others. When deciding on an area, it is advised to stay close to home as much as possible, as this will allow the person to better manage the property. If there is nothing affordable in your area, drive an hour or so out into the suburbs to see if there is anything affordable there. It is also a good idea to check into condos, mobile homes and tax liens to see if there is something there that you can make a profit from.
How To Decide On A Market
Evaluating a market is key, especially when trying to decide on investment properties. You can do this by looking at job opportunities, population growth, safety and crime rates, the convenience of stores and restaurants, public transportation, entertainment and so much more.
Having Others In Your Corner
When looking to purchase investment properties, you will need people to assist you in different areas, such as contractors and advisors. Some of these people include a spouse, business partner, advisors, mentors, property managers, attorneys specializing in real estate, and lenders. From there, other relationships pertaining to the property itself, include a closing agent, home inspectors, plumbers, painters, yard service, electricians, general contractors and more.
Get Financing In Order
Securing a loan is an important step in the purchase of a home, and it is a good idea to know the difference between the various ones. For example, FHA loans, VA loans, Conforming loans, portfolio loans, hard money loans, and private lenders are all types of loans one can qualify for. The type of financing you choose will depend on your financial situation that was determined earlier in the process. Talk to others that have more experience in this area to get their guidance and opinion so that you can line up the best loan plan based on your financial situation.
Look For A Home
Once you have secured a loan and have committed to the down payment amount, it is time to start looking for the first property. It is always a good idea to start small by purchasing a smaller one- or two- bedroom home that you can rent out. It is okay if the home needs a little work, as it is easy to accomplish this by adding a fresh coat of paint or redoing a bathroom.
Talk To Neighbors
Talk to neighbors and explain that you are looking to buy a home and ask them if they have had any difficulties with tenants or the owner. Drive around the neighborhood and check things out during the day, on the weekend, and in the evening so that you can see for yourself what the neighborhood is like.
Purchase A Home That Is In Foreclosure
Homes in foreclosure are priced very low because they have a lot of issues with them and will need to be repaired. This can be a good investment for the person that is handy and can fix certain aspects themselves. The payoff may not be right away, but once the home is flipped, the owner can sell it or decide to rent it out.
Screen Tenants Thoroughly
If you decide to rent, make sure that you run a complete background check on possible tenants to ensure that your first rental property is a success. There are various online sites that provide landlords with different programs that they can subscribe to that will help ensure that their tenants are good ones. This includes verifying previous addresses, a background check and any evictions made in the past.
Buying a house to turn into an investment property is rather exciting, but it does take work, time and patience. If you are truly interested in this, learn everything you can regarding the real estate market and talk to people that are currently doing it. Read everything you can from books or free online sites to become better familiar with the process.