You’ve seen the late night infomercials, you’ve read the books, and now you’re thinking about buying your first investment property. But this isn’t like getting on the computer and buying some stock. When you play the stock market you can get in for as little as a few pennies, but with real estate you’re looking at pouring in five or six figures. The reality is people lose lots of money every day through investing in real estate. So, if you want to try your hand, be sure to check out our top five list for buying your first real estate investment.
- How Sure Are You?
Are you willing to pick up a hammer or unclog a toilet in the middle of the night? You could hire someone to do it for you, but when you’re first starting out every dollar counts. People who start by pretending to be a millionaire end up losing a lot more then if they just did it themselves at the beginning.
2. Get Comfy With Debt
You may be thinking that getting into investment to get out of debt is a good idea, but won’t you don’t realize is real estate investing is a game of spending money to making money. If you plan on flipping a house, you’ll need to find money to not only buy the house but to pay for materials and labor when fixing the house. Many investors find sources of money and jump in understanding they’re going to have debt.
3. Down Payment Ready to Go?
Most investment properties will require a down payment of some shape or form. If you’re getting a traditional loan then a bank is going to want a down payment. If you’re teaming up with another investor then they’re going to want you to have “skin in the game.” So be prepared to put some money on the table to make it happen.
4. Know Your Numbers
So many investors lose money because they don’t know the best practices behind collecting the numbers of the deal. For example, to find the after repair value of a property you’re going to want to find good comps, and then you’re going to need a trustworthy repair estimate. And, if you’re lost, then you need to do some more research.
5. Right Location
Every town, city, and state for that matter will have a desirable location that just has demand, so you need to be asking, “Am I buying in the right location?” Look for great school districts and low crime score. Those are the best areas for first-time home buyers. If the demand is high, then the location is good.
Overall the most important tip is to keep realistic expectations. People rarely become an overnight success. If you keep a good head on your shoulders you shouldn’t have any issues, but don’t bet your house or do anything that would cost you severely. So keep on studying, applying, learning and, when in doubt, find someone that has more experience than you.
HomeVestors of America® is the nation’s only real estate investing franchise, providing wonderful business opportunities to real estate and investment professionals across the nation.