01 Oct 10 Tips for New Investment Home Buyers
First-time investors often get overwhelmed with the process. This is easy to do when you’re dealing with potentially hundreds of thousands of dollars, which may be your life’s savings. Thankfully, there is only so much land to build on, meeting real estate is a finite resource that will likely continue to appreciate for this and many other reasons.
Before you decide to dive into investing, you want to take a breath and make sure you go about it with a plan. Today’s tips are provided by the Gulotta and Gulotta law firm.
Decide If It’s Right for You
Being a real estate investor requires a huge chunk of your time, money, and other resources. Having just one or two properties may turn into a full-time job, which may take away from the reason that you plan to invest in the first place. Further, it’s a competitive market, and not everybody succeeds, which is why it makes sense to reach out to Gulotta and Gulotta for advice and guidance to protect your investment.
If history has shown us anything, it’s that small businesses can succeed. Just take a look at Walgreens, Kroger, Coca-Cola, Harley-Davidson, and UPS. These and countless other major corporations started small, which is almost always the right move for new businesses. There’s nothing wrong with your first investment being a small single-family home; you don’t need to buy a multi-unit apartment complex starting out.
Form A Business Structure
Real estate investing is a business, and it should be respected and treated as such. Lay the groundwork for your financial success by forming an LLC. Georgia attorneys (or an online formation service) can help you establish the structure, which reduces the chances of your personal money being targeted in a lawsuit.
Hire A Realtor
Your realtor will essentially become your business partner, and they can help you avoid money pits that won’t do anyone any good. Further, an active and attentive agent will alert you to new potential properties once you’ve got a foothold on the market.
Check Your Credit
According to SparkRental, a credit score of 640 or higher will help you get a better loan. However, you’ll need to keep in mind that not all conventional mortgage lenders offer investment loans. Know your credit score, and then consider improving your financial standing if your score falls below this threshold.
Do The Math
Determine how much you can charge for rent and then compare that to how much you pay each month and the money that you put into the home to make it livable. If you can’t turn a profit each flip of the calendar, then it’s time to look for another property.
Know Your Market
In addition to knowing how much you can charge, you also have to know which types of homes are most popular in your area. Your real estate agent can help with this as well, and they can even point you towards school districts or tourist attractions that might make your home more marketable than others.
Connect With Other Investors
When you’re first starting out, Timesnext notes that it might make sense to network with other investors and buy properties as part of a group, which you can easily do if you’ve established your LLC.
It doesn’t matter whether you are buying to flip or to use as a long-term or short-term rental, establish processes that help you run your investment business more efficiently. This might include mandatory credit checks or requiring automatic mortgage payments.
Outsource Time-Consuming Tasks
While your first investment property will be a learning experience, if you still have another job or family to attend to, it makes sense to outsource things, like property management and home repairs. You can do this through an agency or simply have a group of individuals on call that can take care of problems as they arise, which is a big part of minimizing liability. Steps like leveling sidewalks, installing railings next to steps, and removing old or damaged trees are simple and inexpensive, but can greatly improve the safety at the dwelling. Go online and use service directories for locating a service near you, and be sure to read up on customer reviews to evaluate each contractor’s level of expertise.
Real estate investing happens at a fast pace, and not everybody succeeds. But, if you do your research, treat it like the business it is, know your market, and create systems and processes early on, you can boost your investment potential and start down a path toward financial independence through real estate.
By: Derek Goodman / Image via Pexels
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