Buying my first home

[Jaron S.]

Hello everyone,

I’m looking to buy my first home in the next 4-5 months, and I’m both excited and extremely nervous.

My ultimate goal for this home is to live in it for the next couple of years, fix it up over time, and sell it for a profit. Ideally I’d like to rent out a bedroom or section of the home to offset some of the renovation costs. I’m also considering renting it out once I move out, so long as I maintain positive cash flow with the property.

As a future investor, what are some things that I need to look for before purchasing my home so I get a good return on my investment?

I’m very new in the real estate investing world so any insight will help.

Thank you

[Dan M.]

If you can do the work yourself thats great you will save a ton of money. Try to find something that's livable but outdated and you can add value to the home by doing simple upgrades one room at a time. If your going this route I suggest you do not keep it as its your primary residence as you cans ell it and keep all the gains tax free as long as you meet the IRS requirements ( talk to your accountant ).

A second alternative is finding a duplex - 4 plex and living in one while renting out the others. Then when you move out you can keep it as a rental and likely refinance your upgrade money out to buy another one and do it again. Here you have to speak to a lender to see if you can get primary interest rates ( much cheaper than commercial loans ) and you only have to put 5% down. If you can afford to do so put down 20% so you save on PMI.

If you want a good investment, run your numbers and know your market. After you fix it up will it rent for x,xxx ? Whats your mortgage? Whats your costs? How much will it cash flow? In 5 years will it be worth more? Start asking these types of questions to yourself and get solid answers before jumping into a purchase so you dont end up having to pay money out of pocket where you can. ( I feel most peoples first deals cost money out of pocket anyway but try to avoid the I'm renting for 900 but my mortgage is 1200 scenerios )