4 Tips to Avoid Overpaying for Your First Investment Property

Let’s talk about how to invest in your first investment property without overpaying.

4 Ways to Ensure You Won’t Overpay

1. Be patient.

First, I want to talk to you about how when I started my journey as a real estate investor, I made a lot of mistakes. One of the mistakes was being impatient.

I was just buying properties for the purpose of adding properties to my portfolio, so I could call myself a grand real estate investor. But I wasn’t really generating a better life for me and my loved ones.

Thankfully, I woke up and smelled the roses and sold out of that portfolio. Then, I restarted my real estate investment journey.

The message for you is this: You have to be patient when you start your real estate investment journey. Be very patient; don’t rush in and don’t jump into it.

2. Surround yourself with knowledgeable people.

The second thing is figuring out how to not overpay for a property. I think you need to surround yourself with the right people.

I’ve said it before, and I’ll say it again. I’ve done hundreds of videos, and I always keep talking about this. I’m literally like a broken record.

Teamwork makes the dream work.

People like real estate agents, real estate attorneys, title companies, accountants, property managers, appraisers, building inspectors, contractors, and maintenance people are going to be your mentors. Other successful real estate investors are going to be your mentors, too.

You have to surround yourself with these people. So, spend time networking, shaking hands, and kissing babies. Go to real estate events, post on online forums, and ask questions. Spend money on lunches, dinners, and coffees. The best investment is investing in yourself.

I’m not saying to buy DVDs, courses, and masterminds. That’s all fake guru crap.

I’m talking about going and talking to people that are actually out there and doing it every single day. And they won’t be hard to find, because you will see them in the trenches doing the work.

When you meet these people and talk to them, you need to realize that they will ultimately be your eyes and ears, your heart and soul, if they’re in a region you want to be investing in. They’ll be the ones that will mold your opinion when it comes to real estate investing and give a lot of real estate insight in regard to everything that’s happening in that area. From the price points to the market valuations, they’ll provide insight.

Remember, teamwork makes the dream work, and network your butt off.

3. Get familiar with your market.

You also have to become an expert in the particular region you’re interested in.

We’ve talked about talking to a lot of people. Now let’s talk about some of the data, stats, and analytics.

Immerse yourself in anything and everything that you possibly can find online when it comes to what properties are selling for on the MLS:

What are the price points?
What are renovated properties selling for?
What are distressed properties selling for?
What are properties renting for?
How much can you buy a distressed property for?
What can you sell a renovated property for?

Check out Craigslist and Facebook. Basically, leave no stone unturned. I want you to become a master in the market on everything that is going on in that particular area.

You’re going to get a lot of insight from the people that you’re meeting with. But you’re also going to get a lot from educating yourself on all the online stats, demographics, and comparable sales. Then, in my opinion, after a decent amount of time, you will become a market expert.

You’ll know the true value of a renovated property and what a bargain is when you see it. Then you can make a decision very quickly, because you understand the market value.

4. Once again, be patient.

I can’t emphasize this one enough, you have to be patient. I’ve done over 1,000 deals, and we offer on 100-plus deals every week. But we only buy a handful of properties.

I only buy when the price is right, I know I can make a good profit, and I can still deliver a good product to my investor for fair market value with a good cap rate in place. So again, be patient.

When one door closes, another door opens. Just wait for the right deal to come along in the right area that you can buy for the right price and that needs the right amount of rehab. And make sure you know you can make a good profit margin and a good return on investment if you’re buying and holding.

In my opinion, that’s the only recipe where you’re not going to overpay for property. If you think you’re an expert just because you’ve read one article and saw one video—and now you’re going to go to the market and buy a property—you’ll probably lose your butt and overpay.

If you spend a year doing what I’m recommending, there is no chance that you’re going to overpay. Then, if you’re patient on top of that and wait for the right house, I really don’t see how you’re going to overpay on your first property.

Guys, that’s my advice to you. Take it or leave it.

Am I right? Am I wrong?

I’d love to hear from you in a comment below.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.