Are You Ready To Invest In Real Estate?

Are you ready to invest in real estate? If so, great! But in order to do so, you must have a well laid-out plan, similar to the extensive and all-inclusive details of a business plan. So how do you start that plan?

1. Determine what kind of investment you're looking for. Are you an investor, home buyer, or both? Maybe you're interested in purchasing a single family home to live in or rent out. Perhaps you're looking for a multi-family home to live in while renting the other unit(s) or purchasing to rent out all units. Is it a fix and flip or buy and hold property that works for you? If renting, are you looking for short term or long term, and are you really ready to be a landlord? You know, dealing with those 3am calls about water leakage or failed furnace can be troublesome. What type of tenant are you looking to attract? Undoubtedly, you're looking for cash flow and a good return on that investment. If you're a home buyer, is this your first time? I ask because there are financing programs available for first time homebuyers, maybe even some assistance with costs, if you qualify. Then ask yourself what kind of property are you looking for and what must it have versus what you hope it has. And where would you like to live and/or invest in? Best to determine what works for you first.

2. How are you going to pay for your purchase? All cash, borrowing or a combination of both? Are you ready to take on a mortgage with all your other household expenses? Many investors get a hard money loan for repairs or fix and flip, but that often comes with a higher interest rate and a strict timeline for repayment. Most buyers use a Conventional, FHA, or VA loan. For investors DSCR (Debt Service Coverage Ratio) may be a good option. It's always best to talk to a lender to see what you could qualify for PRIOR to looking at properties. Considering all cash? Maybe you should consider holding on to your cash and finance??

3. Use a real estate professional or go online and look for properties that match your criteria and save those findings. You can also access local real estate forums where you may find more information about a specific property and/or local neighborhood. So utilize all sites that talk about real estate including your local county website. Looking at the numbers, would this investment work within your budget? If so, contact a Realtor®to tour the properties. Licensed professionals will prepare automated searches based upon your criteria. They also have intel into types of properties, age, local trends, condition of the property, how long it's been on the market, and other key points. And choose a Realtor who has experience working with investors and the types of properties they are commonly looking for. Not all Realtors understand the nuances of real estate investing.

Your Realtor is bound by the regulations and ethics of NAR (National Association of Realtors). Furthermore, Pennsylvania Act 52 of 2024, also called the Wholesale Real Estate and Protection Act states that wholesalers are to register with the state, obtain a real estate license and follow disclosure policies. This took effect in January 2025. Be cautious of anyone who is not a full time licensed Realtor.

So reach out to agents and interview a few. Ask a lot of questions. You can always do a Google search to find out some good questions to ask. Then make a decision on who you best associate with and proceed to tour properties with them. But above all else, don't pit realtors against each other. Stick with one relationship until that doesn't work for you anymore. A Buyer Agency Contract (BAC) is now nationally REQUIRED. If your agent does not require that, move on!

Now here's where the real fun begins. Touring a property gives you an opportunity to look at positives and negatives. While it's said that a picture is worth a thousand words, in real estate it may give you a false perception. And seeing the property in person also gives you an opportunity to check out the grounds, parking and the neighborhood. Maybe you don't want to cut grass but you do want a garage. Look at the properties surrounding your target. The best home on the best street doesn't guarantee appreciation if the rest of the neighborhood is depressed. Realtors are trained to point out things you may miss, like foundation issues, or pooling water, for example.

If investing, are there other properties that are being rented out as that can give you hope that you too can cash in. Crunch your numbers. What are your routine expenses vs future expenditures? Can this property cash flow? What's your potential return on your investment? Get familiar with the acronyms like LTV (Loan to Value), ARV (After Repair Value), NOI (Net Operating Income), BPO (Broker Price Opinion), Cap Rate (Capitalization Rate) and so many more. Once you list your top properties, crunch those numbers again and again to insure it's worth it. Also I advise to go back to the neighborhood at a different time. You may find things change, such as level of traffic, on street parking issues or noise concerns. Once you've made a decision it's time to make an offer. Caution: If your chosen property is in a hot area, priced well, and the market is strong, don't wait too long...it could be sold quickly!

When purchasing a property, it's best to have a Realtor represent you throughout the whole process. By doing so they can provide comparables and answer questions you may have about the transaction process, from offer, negotiation, contract, inspections and appraisal through settlement and closing. Ultimately you don't want to lose a property over a few thousand dollars, but. especially as an investor, you want to ensure you're making money. While they will advise you on options like contingencies, they can not make the final decision for you. Their goal is always to keep you compliant during the process as each step of the transaction has time requirements and legalities to watch for. So both home buyers and investors must do their due diligence. The goal: finally closing on a property!

So you've sent your hand money, you've calculated your closing costs and you know what you need to bring to closing. While you don't have to always be physically present to close, just be aware that it ain't over till it's over. Your Realtor must keep you informed all the way to closing. Things can happen..be prepared..and rely on their support!
There's a lot to consider when investing in real estate. Don't let your analysis become paralysis where you never move forward. And you don't have to do it alone. Here in Pittsburgh, PA, the market is hot. Be prepared in order to be successful. So Go Get 'Em.!!