Show148: The Roadmap to Buying Your First Investment Property

investment property

When you’re just getting started with investing in real estate everyone goes through a period in their journey where they don’t know where or how to start.

And let’s be honest…in today’s society many of us want to know the answer now.

We hate having to go down the road of figuring it out and mostly because time is the thing that we all seem to never have enough of.

So for years of working with brand new investors we’ve answered the most frequently asked question when it comes to starting the journey to that first investment property.

Where do I start?

We’ve put together this roadmap that has been used and refined over the last 6ish years in our investing journey to show where to start AND how to get to that first property.

#1 Personal Financial Audit

In order to move forward in this journey you have to know where you are now. You have to get your financial house in order, so to speak, and truly take stock of what your financial picture really looks like. Taking time to determine a budget to ensure that this long term investment will work for you is critical.

#2 Goals & Overcoming Fears

You have to give yourself a path to follow. It’s easy to get distracted and chase the shiny object but if you can determine your why and set goals to keep you on track your journey will be much smoother. Thinking about the type of property you’ll pursue (single family home, vacation rentals, commercial properties, etc) will help you stay the course.

#3 Financing

Once you’ve determined your financial picture, it’s time to actually figure out what you can afford. A lender will help you determine what kind of monthly mortgage payment and interest rates you could afford given what you earn and what type of property you own now. Also, they will be able to get you pre-approved so that you can take action quickly when you find a rental property that is a great deal!

#4 Learning the Market

This is HUGE. Once you’ve figured out how much you can spend, now you have to figure out where to buy property. I stress this step so much because I truly believe you have to take time really researching and understanding the community/town/city you want to invest in. What does this mean?

Learn about the industries, employment rates, entertainment, population growth, good and bad parts of town. What do the property taxes look like in the area and how does that affect your budget. Learning what properties sell for, list for and rent for will all help you become a better investor and know when a good deal comes up.

#5 Running an Analysis

This is the next huge part of the roadmap. You’ve got to learn what types of numbers to look and for and how to take those numbers and run an analysis so you can see what kind of cash flow this property will earn you. We get into buying rental property to earn a return and the cool thing about investment properties is that you can generally know what you can make before you ever even buy it.

So knowing how to calculate the rental income a property will generate is critical to you not setting yourself up for failure.

By spending time in the previous step and learning your market and what kind of monthly rents you can actually earn, talking with real estate agents to get even more in depth understanding of an area married with running an analysis is the cornerstone of finding success.

#6 Due Diligence

Once you’ve figured out where to buy and whether the property makes financial sense, now it’s time to really dig deep into the deal to make sure the property itself fits the other pieces of the puzzle. This is where you are looking at the quality of the property (cap ex) and getting verified information from the current property owner about current rental amounts, leases, utilities etc. A true and verified idea of the operating expenses will be huge in this part. And because they are selling the property they obviously want rid of it for a reason. But ask for documents to verify all of the information they are giving you.

#7 Offers & Closing

You’ve got to figure out how to put together competitive offers together so that you put yourself in the best position possible to getting the deal. There are definitely things you can do when putting the offer together to allow yourself to give a bit in the negotiations so that you are working with the sellers to get the best deal. We deep dive into this in our course.

>>>Click here to learn more about how to get started with Rental Property>>>>>>

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