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.
Step
#1
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.
Step
#2
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.
Step
#3
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.
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