Deciding to invest in real estate is one of the best decisions you will ever make for yourself. However, it isn't something you can decide to do one day and then rush out and do the next. There is a process that you have to learn and lots of information to digest. If you think you have done that already and you are now prepared to go out and make your first purchase, here are 5 questions to help prepare yourself.
What type of property are you interested in? Are you interested in a single-family unit, a duplex or maybe a multi-family complex? Are you interested in hotels or motels? What about undeveloped land? How you answer this question will determine other things that you do later, such as how you go about financing your investment. It is also best to choose one direction to pursue so you don't go on wild goose chases and so your team knows what they should be helping you with.
Do you have a specific area that you are interested in? Are you going to invest in the city where you live? If not, what part of the country are you interested in? The Internet is the best resource for determining what area of the country you would like to put your time and money into. Ken McElroy, author of “The ABCs of Real Estate Investing,” calls this Level I research. Later, once you have decided on a part of the country and a city in which to look, you will need to decide on a neighborhood. You will find that during McElroy's Level II and Level III research.
Do you have a plan to pay for it? The type of investment property you are looking for (as well as your existing equity) will determine how you can make your purchase. If it is a smaller investment such as a house, you may choose to pay for it outright. However, even if you don't have the finanacing in place, if it is a piece of property that has made money in the past, the bank will probably give you a loan. They know that they will get a ROI regardless of what happens to your investment. If you are looking at a large property that you can't afford outright, you will probably be able to find other investors to partner with you.
Is my team in place? You can't do this successfully without a team. This is simply because of the large amount of work involved, and so many disciplines of knowledge involved, that you simply can't do it all. You won't have enough time to become skilled at real estate law and accounting, plus broker your own deals and manage your own properties. It is necessary to delegate. That is why McElroy recommends you start with a lawyer, an accountant, a broker and a management company. After that, you may also need appraisers, tax consultants, a surveyor, a structural engineer, an architect, an estate planner and more.
How much do you have to spend on repairs? This is very important. Knowing this will help you choose the areas of town to look around in because some areas may be full of old buildings or some newer buildings may actually be in serious need of repair. You will have to know what you are getting yourself into and whether you can handle it.
This isn't a an exhaustive list of questions. Once you start your investment property adventure, you will find a never-ending list that you will need to address. But these will get you going on the path to asking yourself the right kinds of questions. Sometimes asking the appropriate questions is more important than the answers themselves.
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Real Estate Investing Expert Alex Anderson Helps People To Buy Minnesota Investment Property. As A Licensed Realtor And An Investor Herself, Alex Owns And
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