If you are on the lookout for buying an investment property right now, you are definitely thinking right!
Real estate investing is a good business decision and one with financial perks for many years to come. Most homes appreciate in value and your benefits will definitely outweigh the costs of buying an investment property years down the line. But if you are here reading this post, it means you know jumping on the real estate wagon is worth it and has many incentives nevertheless. So for those who are interested in kickstarting their real estate business but not sure how to get started, this is the blog post for you.
Buying an Investment Property in 7 Practical Steps
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Do not take out a loan if you haven’t done these steps:
Do not be in a hurry to start viewing investment properties and making offers just yet; the best way to make money in real estate it is to assess your current financial situation before you hone in on the best investment property for you.
Buying an investment property becomes a sound decision after you have accomplished the following;
A. Saved money. Without little capital, you won’t qualify for a loan and/or be able to afford to buy an investment property.
B. Examined your finances. It is always recommended to get prequalified for a loan before you start making offers on a house. The prequalification process can be done over the phone or online. It is a painless process and most importantly, it will save you time in determining the amount of loan you can qualify for to set the budget for buying an investment property.
C. Counted the costs. It is extremely crucial to get an accurate estimation of your costs and projected expenses before buying an investment property. To do this, make sure you have a professional real estate agent or advisor to give you an overview of your financial viability. There could be hidden or extra costs tied to the house that you may not be fully aware of i.e. buyer’s closing costs, moving costs, move-in costs, maintenance costs etc. So be very careful to conduct your cost/benefit analysis first and foremost.
Related: Financial Planning for Real Estate Investing 101
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Waiting to buy a home in a few years time may not necessarily be better
We also encourage you not to wait too long before buying an investment property. The sooner you do it, the better. And never assume you can’t afford to buy a house. Lucky for you, you live in a country with many options and opportunities to make money, and real estate is no exception. There are many down payment assistance programs you can look into. You can also look into foreclosed homes or neighborhoods where you can find good bargains. Turn to professional advice to get you sorted: an investor, mentor, broker or a real estate agent.
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Have a business plan
This applies to beginner and expert real estate investors because you cannot make money in real estate without conducting a business plan and setting your financial goals. Buying an investment property is a big step, so it’s important to know why you’re buying and what kind of real estate strategy and type of investment property you want to invest in. Also, financing a house should not be taken lightly; examine your current financial situation and project how much you can afford.
Related: Real Estate Investing for Beginners: 5 Things You Need to Know
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Do your homework and stay on a steep learning curve
If you want to make money in real estate and find long-term success, then you must keep yourself informed and educated on the housing market. You must keep up with the ever-changing market trends to know the best time to buy, in the best areas for the best price. Keep an eye on real estate comps and become an expert in conducting comparative market analysis. Without proper research and knowledge, you will be way behind the cutthroat competition.
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Do not buy before getting a thorough home inspection
To stay on the safe side and mitigate unexpected expenses in the future, hire a professional home inspector to look at the investment property before you sign the contract. There is nothing worse than paying a hefty price for major property issues discovered over time. The best thing you can do is mitigate this risk by getting a thorough home inspection before buying the house.
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Become a master negotiator and practice your poker face
Hone this skill and you will become a very successful real estate investor. The best negotiators come prepared, meaning they do their homework, familiarize themselves with recent sales, check real estate comps, and justify their offer with recent market research etc. The more knowledge you have, the better negotiator you become.
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Use Mashvisor to find profitable real estate investments in a matter of minutes
The best source for buying an investment property is Mashvisor of course. Why you ask? Mashvisor makes your life easier by providing real estate analytics and detailed investment property assessment on thousands of real estate properties across the US. You will find the best profitable real estate investments for traditional and Airbnb rental properties in a matter of minutes. Real estate investors and real estate agents especially love the rental property calculator because it allows them to input their own costs and expenses to find the best return on investment.
Related: How to Find the Best Income Producing Assets in Real Estate Investing
Conclusion
For anyone keen on starting their real estate business venture and buying an investment property, make sure you study your prospects and consult professional mentors and real estate agents to help you make smart decisions and buy the right investment property for the highest rewards. Your business plan should be aligned with your financial situation and long term business goals. Do not be over-ambitious at the beginning and try to be as pragmatic as possible. You don’t want to take on more than you can afford; it will only burn a hole in your pocket and make you wish you never went down this path in the first place.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.