How to Buy Your First Investment Property

Real estate investment offers the opportunity to invest your money in an industry that has a history of positive returns. However, for first time investors the process to enter the real estate investing business requires education and research. Before you purchase your first real estate investment property, take the time to educate yourself on the industry.

Start by researching real estate investing and find an experienced and successful real estate investing mentor. With the availability of online resources, you can work with a successful real estate investing mentor anywhere in the country. A great place to start your education is with my series of real estate investing webinars.

Determine the Financials

Once you’ve established your foundation of knowledge, you can begin the process to buy your first investment property. The first step is to find financing and determine your price range for buying a property. You can’t search for a property until you understand what you can afford to buy.

Your financing options include a bank mortgage, private financing or an investment partnership. For most first investments, a mortgage is the best option. In this case, you must work with a bank to determine the mortgage amount you will be approved for and the necessary down payment. As a side note, even if you have the cash on hand to purchase your first investment property outright, you may still want to consider financing. This will allow you to use your cash for future real estate investing.

Locate a Property

After you’ve determined the amount you can afford, it’s time to search for your first investment property. For rental properties, you want to look for a home that is in a location that will allow you to charge the monthly rent you need to collect to make a profit. Also, it is wise to start small with your first property while you are still learning about the business.

When determining if a property is a good fit for a rental, you must consider all the expenses required, including the monthly mortgage, taxes, insurance, upkeep, repairs and utilities. If the property was previously a rental, ask the seller about vacancy rates. You can’t cover your costs if you don’t have a renter.

Making the Deal

Now that you’ve determined your budget and found a property, it’s time to make the deal. Especially since you are new to real estate investing, it’s important not to let your emotions rule. Do not get into a bidding war and exceed your budget. You should not pay more for a property than it is worth. The entire point is to invest in a property where you can have a positive return on your investment.

Remember, for a first real estate investment purchase, it can be wise to find an experienced partner to help reduce your risks. This is also where a real estate investment mentor can offer valuable and expert advice.

Key Considerations

Buying your first investment property is a big step. Before you dive in think about these key considerations. What is the condition of the property? You don’t want to have to do a total remodel of a property before you can rent it. Look for properties that require minimal or simple repairs that may allow you to charge more in rent. Also, consider whether you can do the repairs yourself or if you’ll require professional help which will add to your costs.

Understand your return on investment (ROI). Don’t let the excitement of purchasing your first investment property lead you to make a poor ROI decision. You want to purchase a property that will allow you to turn a profit. This way you set yourself up for success with future investments.

Learn about real estate investing from an expert to guard yourself against poor decisions. One of the best ways to do this is with solid guidance from experts in the real estate investing business. I offer a selection of webinars that teach you about how to enter the real estate investing industry. Use these valuable tools as a guide on your path to buying your first investment property.