The steps to buying a house can be very different from one real estate investor to another.
But one thing remains the same no matter what kind of real estate investment you’re making: you will need to understand all the different aspects of real estate investing in order to know which steps apply to your investment and which do not.
Steps to Buying a House: Getting Your Finances in Order
Before even applying for a house mortgage, you need to have an excellent understanding of your finances and what they can offer you. This means that you will have to get a credit report, read it, and make sense of it in the same way that a lender would once he/she looks at it.
This will give you a better idea of the kind of house loans that your finances will allow you to seek, and will save you the time of getting rejected by lenders as not qualified due to poor credit history or score.
Steps to Buying a House: Knowledge of the Mortgage Industry
There are numerous types of loans in the real estate market, and each has its pros and cons when it comes to each and every type of real estate investment or real estate strategy.
Related: Buying an Investment Property: Cash or Mortgage?
So, before you apply for a mortgage, make sure to have a thorough understanding of each loan type available to you in order to determine which loan will be best suitable for your real estate property purchase.
You will need to ask yourself key real estate questions such as:
- What is the difference between mortgage brokers and bank loan officers?
- Should you choose an adjustable rate mortgage?
- What is debt to income ratio?
- What are VA loans and FHA loans?
- What are discount points and should you buy them?
In addition to several other questions that you should research and get answers to.
Steps to Buying a House: Mortgage Pre-Approval
Getting a loan pre-approval can be very helpful for any real estate buyer. It allows you to get an idea of the amount of money that you will be able to borrow, letting you better determine the type or price range of real estate properties that you will be able to afford buying.
Additionally, having a loan pre-approval gives you an advantage over other real estate investors when trying to compete over the same investment property. A seller will be more inclined to sell his/her property or initiate a deal if you go to him/her with a pre-approved loan, as it will make you look more prepared and more serious about your property purchase.
Steps to Buying a House: Identifying Your Needs and Wants
It is important for all real estate investors trying to purchase a rental property to have a clear idea of what they need from their investment and what they want from it. The needs of your investment will set the boundaries within which you will be working, while the wants will help you determine the different modifications or additions that you could make on your plan to help you reach a more desirable situation based on your real estate investment strategy and goals.
Related: 6 Strategies for Buying an Investment Property Low and Selling It High
In order to determine the needs and wants of your real estate investment, it is crucial that you have a deep understanding of the real estate market and all of its aspects to help you determine what’s important for your investment and what’s optional.
Steps to Buying a House: Working with a Real Estate Agent
One of your best allies in any real estate deal, whether you’re a property buyer or a property seller, is a real estate agent. Understanding what real estate agents do, their responsibilities, and how you can utilize them to improve your real estate transaction and guarantee the success of your investment is invaluable for you as an investor in real estate properties. You should always be looking for real estate agents or real estate brokers who can help you in your deal and select the ones that are most suitable for your investment plans and goals.
Steps to Buying a House: Home Hunting
This stage among the steps to buying a house for investment purposes is one of the most exciting ones towards closing a deal. Searching for a home or an investment property can be a fun process, as you will finally be seeing the end product that you’re trying to purchase and deciding which property will be your future investment.
Related: Buying Your First Rental Property: FAQs
There are several sources to get investment property listings from, both online sources and old-fashioned newspapers and real estate magazines. Some sources, such as Mashvisor, can provide you with additional real estate investment tools that can allow you to find rental properties, compare them, analyze them, and calculate their return on investment, providing you with great utility over the base value of just finding an investment property.
Steps to Buying a House: Making an Offer
There are many aspects to making a real estate offer, which can differ depending on where you live. The laws that control a real estate offer can vary from one state to another, so make sure to consult your real estate agent and/or a real estate attorney to get more information about the laws and customs that dictate your offer-making.
Steps to Buying a House: Home Inspection
This step is an important one if you’re a home buyer, as purchasing a property only to find out that it’s infested with pests or that the sewage system is completely broken can lead to the complete failure of your real estate investment. So, before closing the deal, make sure to hire a home inspector to check that you’re not falling into a trap on your purchase. If there are any additional costs or expenses that are needed to repair the property, you can ask the seller to cover these expenses, saving yourself the additional expenses that you would’ve had to pay otherwise.
Steps to Buying a House: Closing the Deal
Finally, once all the other steps to buying a house have been completed, it is time to close the deal. Make sure to obtain all the required documents needed to close the deal, and keep in mind the different closing costs that may come up upon finalizing the sale of the real estate property.
Ask your lender for a list of closing costs that may apply to you, and ask your real estate agent for a list of any other closing costs that are related to the property or the agent’s fee.
While this list describes all the steps to buying a house as an investment property, there are much more details that you will need to educate yourself about before conducting any real estate deal. Make sure to subscribe to Mashvisor, and we will keep you up to date with our daily blogs and guides on real estate investing.