6 Crucial Steps on Investing in a Real Estate Property
Posted in : Information on by : Tony Gay
Thinking of buying your very first property? Before doing so, read carefully the following steps for investing in real estate.
1. Figure out your strategy
If you have great carpentry skills, then you might want to take the renovation path. If you want to deal with a renter or a tenant, you may opt for a long-term rental. Or you may want to purchase an undervalued property, hold it for several months, and then flip or sell it at a higher price.
2. Talk to realtors
Look for a realtor with a strong sense of investment in mind—someone who can tell you the figures you need to know about a property.
3. Talk to mortgage brokers
After you have chosen a realtor, ask for three broker referrals. Look into the closing costs and interest rates offered by each bank. When meeting with the representatives of the banks, bring a copy of your credit report and a sample property so that they can give estimations.
4. Place contracts on the lowest-priced property in the best neighborhood
For example, you have found the cheapest two-bedroom property in the best neighborhood in a certain city. It costs $100,000, and the second cheapest costs $140,000. To earn a profit, you can purchase the property that costs $100,000 and sell it later at $130,000. Even if you raise the price of the house, you can still find a buyer since it costs less than the second cheapest house in the neighborhood.
5. Close the property
You will sign a contract and inspect the property for damage and pests. Afterwards, your lender will evaluate your home. Once your loan is approved, you will close the property. This process usually takes about 30 days.
6. Execute your investment strategy
For renovation strategy, look for a dependable crew who can get the project done on time. When the project is completed, compute the new sales price by finding out the cost per square foot of each property in the neighborhood.
For rental strategy, find out the average rent in the neighborhood for the particular number of bedrooms of your property. Advertise that your house is available for rent. Once you have found a tenant, create a lease agreement and an application form to be filled out by the tenant.