What's the first step in investing in real estate?

Question

I've read alot of book and right now a bit lost on where to start. Do I look for financing or house first as an investment property? mobile home, single or multi family? Do I need to build a team/network to work with me?

Answer 1

The first step is to look at the relationship between prices, rents, and interest rates. Take the rent and multiply it times 12; this will give you your annual rental income. Then take this income and divide it by purchase price; this will be your property's annual yield. Now compare this yield to the interest rate that you are likely to get on financing; the yield should be SUBSTANTIALLY higher than the interest rate (your simple yield calculation ignores vacancy, maintenance, and fluctuation of rent over time).

Answer 2

1. Decide what exactly do you want financially - positive cash flow / positive gearing / negative gearing / capital gain.

2. Decide what you budget is. Get loam pre-approval from the bank or broker.

3. Decide on the area / state where you can potentially get your targeted property for your approved price. Look for population, developments in the area, employment, schools (I'm sure one of your book will have a checklist)

4. Search for property - internet, papers, visit realtor's offices, inspect properties. See as many properties as you can. Collect the figures on rent, rates

5. Shortcut to few properties that can fit your requirements. Make written offer (cut the asking price down), then negotiate the price.

6. If you don't have much experience - go see your accountant for check the numbers and whether the property will really perform as well as you think (eg. will it really be a [positive cash flow and how much will you earn)

7. If the unswear yes - go back the real estate agent, get the contact, go se you solicitor, banker and do all paper work... This is usually the easy part as you just sign the papers and they do the rest. Use independent solicitors / brokers, not those advised by the real estate

8. Woala! You got your investment property! Not go get the rental agent and rent it out.

Good luck!

Answer 3

Look for a property first. I would recomend a multi-unit <5 units. 5 and up clasifies as commercial and is harder to finance. 2-4 bring in more income than a single house. Once you find a property you are interested in, then figure how much you are willing to pay, and then work out financing options. Use the seller in financing! Most 2-4 unit buildings are owned by investors and they may be willing to help loan you some or all of the money.

Good luck!
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Edit: The reason I recomend finding a place first, is that if you tell a Realtor how much you can afford, they are likely to try and sell you something as close as possible to that to get the higher commision. If they don't want their time to be wasted, they will work with your to finance the property.

Answer 4

And I disagree with the above two post! ;)

The first thing is to define what your investing goals are. Long term? Short term? What are you trying to accomplish? etc.

Then you assemble a team of people or a network of people who can help you achieve your goals.

Trust me, if you find a good deal in whatever you're doing, the money will be easy to find. I personally have access to a lot of private money I can tap into to finance my deals if need be. I didn't have to run my credit, apply for a loan or use my own money.

Regards

Answer 5

I disagree with all the post above . The first thing to do is find out what you can afford . There no use waisting anyone time if you have no money or credit . The easiest way ( financing ) to buy a house and move in it . Move out when you can afford your next house and rent the first house out . Most traditional bank require a min of 10 % down and most of the time 20% down . You can get financing with a higher rate with less money down . I bought most of my houses when va foreclosure where around . Anyway good luck with it

Answer 6

Make sure you buy 2-4 units to start with. It will be easier to get a loan if they know you will have income coming in.