Before You Make Your First Real Estate Investment
Posted on December 18, 2008 in the Real Estate category
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Just because you’re making a real estate investment, it doesn’t mean that you are wealthy. You could be purchasing your first home for your family, or you could be changing career paths and pursuing real estate as your career and passion. Don’t be careless; consider these steps to get yourself on a good course towards success.
1. Do the research. Adults don’t usually like to hear the word “studying” it brings back long, stressful or boring nights in college and high school. But you need to study up before you make a real estate investment. You need to study the market, study the location and the legal processes involved. You need to find out every element you will need to worry about, from taxes to insurance to government regulations and more. If you don’t find all of this out in advance, you can be in for a rude awakening down the line.
2. Prepare all of your finances. Some people do things the wrong way, like finding a property you love and then trying to figure out if you can finance it. This can lead to accepting bad deals, waiting a long time for a loan and missing out on your chance to strike and many other mistakes. So you need to get that financing ready ahead of time. This will give you adequate time to find out the best option for you, and what properties you’ll be able to pull off. Without this you can take too much risk or accept bad loan terms.
3. Now find the property. There’s more to do than just look at a newspaper and pick out the property, although that can be a good start. You can use the internet to find your dream real estate investment and you can drive around the area looking for signs. You can also keep in touch with listing agencies, construction and development contractors and more to get a leg up on other investors.
4. Negotiate! Everything can be negotiated, and if you don’t try, you are losing out on the benefits. That doesn’t mean you should expect to walk into a negotiation and get everything you want either. You want to be able to negotiate a fair price that works for both parties involved, ensuring the deal gets down quickly and properly. Negotiation is about compromise, so know ahead of time the range, timetables and other factors you can live with.
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17 Responses to “Before You Make Your First Real Estate Investment”
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Great article for people to follow to help us avoid the economic problems the United States currently faces. In Myrtle Beach, SC home prices have dropped over 30% in the last year, and with FHA financing and rates at 5%, it’s a great time for first-time home buyers-who have been smart and saving- to make a wise investment in their future. Smart buying will help us all and the economy!
Great article for people to follow to help us avoid the economic problems the United States currently faces. In Myrtle Beach, SC home prices have dropped over 30% in the last year, and with FHA financing and rates at 5%, it’s a great time for first-time home buyers-who have been smart and saving- to make a wise investment in their future. Smart buying will help us all and the economy!
If more investors had looked at this before I dont think we would be seeing all the foreclosures we are seeing these days.
I am about to buy a property in Malibu and this writing made me think twice before making my final decision. Thanks a lot.
Hi. Of all the steps you’ve outlined here, you can’t stress the importance of research enough… it’s the base for every thing that follows!
Mary,
You make some excellent points. It is a great time to be a buyer in today’s’ market, but one really needs to do their homework. In addition to doing research you also need to be committed for the long haul (at least 5 years). The people that I see doing well with real estate are buying and holding not selling after a couple of years. As you mentioned, get the financial side in order first. This saves a lot of time and pain. There are so many sources online for new listings etc….. but they are generally all coming from one local data feed (the local MLS). Find a good buyers agent and stick with him or her, don’t hesitate to ask them questions about any property that catches you eye. Put them to work!
I have seen far too many people lose their life savings in real estate by just jumping into a property thinking that home or a building is easy and can make them rich. Seasoned professionals still make mistakes in tough markets. Do your research and make an informed desicion. Don’t be afraid to seek the advice of an accountant as well
Research the market is so important. You should see many options and know the market well. Second, preparing your finances is a must. Some people ignore this advise. Thanks for a very good post.
I agree, buying Real Estate can be very rewarding for those who do their homework. Investors who are starting out need to know the area, study the trends. Home buyers who are investing in a home for their own use need to study as well. For example- if they are told that is a “greenbelt” behind your home, you need to be sure it indeed is and not a platted subdivision that is simply not developed yet.
Good Blog!You think some of these things would be common sense, but it never amazes me how many first time investors, just jump in with both feet first!
Great post Mary! Simple and easy to understand advice is the key for success in real estate investment.
I agree with you. studying is a must for any investor. Although investment in real estate categorize as low risk but still need to learn well to eliminate risk.
I have to say that real estate is a combination of luck and hard work to be successful. Great tips you’ve got. Thanks!
Most people start their home search online these days. Getting approved for a loan should be the first thing a buyer does. Otherwise, how would you know what price range to search? Once you know that, then you are good to go and follow through with your other points.
I have been in real estate investing for 8 years and luckily have my 5 units rented and generating some income. I failed to follow some of your rules and didn’t buy at a bid enough discount but it worked out anyway.
I have invested some money to property in Lithunia. Now i have very good growth, but prices are falling seriously. I think soon i’ll continue to invest to eastern europe.
the mentioned 5 steps are desired for all things before purchasing. Real estate requires more attention.