Tips For Buying Your First Investment Property
Investing in real estate can be a great way to make your money work for you. As with many endeavors, the hardest step to take is the first one, and in real estate investing, that first step is buying your first property. This first purchase has the ability to propel you forward into a lucrative career as an investor, but it also has the ability to be your last if you don't buy wisely. The following tips will help ensure your first real estate purchase is a success.
Before you even start shopping, decide if you're looking for a rental or a flip.
There are two main ways people invest in real estate. Some buy buildings and rent them out, making their income off rent. Others buy buildings, fix them up, and then sell them for a profit; this is known as flipping. Before you even start shopping for real estate, it's important to decide which of these approaches you're going to take — because that will dictate which kinds of properties you are looking for. There are some exceptions, but generally, if you don't already have construction skills or connections in the construction industry, you are better off starting with a rental.
Apply for a mortgage.
It's harder to get approved for a mortgage on an investment property than a mortgage on a personal dwelling. So, you want to apply for a mortgage well in advance of the time when you start to look at properties. This way, if you are denied at one bank, you have time to apply to others. You don't want to look at real estate without first having been approved for a mortgage because if you make an offer without an approval letter, it won't be taken seriously.
Listen to your real estate agent's advice.
This purchase is a business investment — and that is all. It's easy to get excited or overwhelmed when buying your first investment property because it is a big step. However, your real estate agent can advise you to offer more for a property, or advise you against buying a property that won't earn you as much income as you need. Work closely with a real estate agent who knows what you want and what you can afford. And trust their judgment!
If you can go in with solid goals and leave yourself plenty of time to apply for mortgages, your first real estate investment is likely to be a success.