7 Steps To Buying Your First Investment Property

You have read countless books, newspapers, blogs, and reports about buying your first property, but the plan never really pushes through. The lack of investment confidence is one of the major reasons why people are hesitant to grow their money in real estate.

The good news is that investing in your first property is not as difficult as you think it is. In fact, property investing is pretty straightforward. Here are seven steps to buying your first property with confidence:

Review your finances

Reviewing your current financial situation can be as simple as noting down all your assets, including your sources of income, and then working out your expenses. It will give you an idea about how much cash you can use to invest. However, do not immediately assume that you cannot afford to buy your first property. So long as you have a stable and good paying job and reasonable monthly personal expenses, then you should not have any problems getting a loan.

Set your goals

What do you want to achieve? Property investors invest in real estate to protect their financial future. To achieve your goals, it is important to determine what your goals are. You should also set a deadline as to when you want to accomplish them, and then start working on them backwards.

For instance, you want to achieve your ultimate goal in 10 years. You can form a 10-year plan, and then break them down into yearly, bi-annual, and all the way down to weekly or daily. This will help you achieve your main goal without feeling overwhelmed.

Get a pre-approval

You can get a pre-approval either directly through a lending company or through a mortgage broker. A broker can help you gain knowledge about your investment options, which is beneficial if you are unsure whether you are ready to invest.

It is not a good idea to apply for several pre-approvals. Every time you file an application, the lender will review your credit history. If there are multiple applications, then this can be a red flag to the lender and your application may be rejected.

Assess your risk attitude

It is crucial to determine what sort of risks you can tolerate. Your risk profile will affect how you make financial decisions. Understanding your risk attitude will help you form a solid strategy.

Form a purchase plan

A purchase plan helps you facilitate your goals and reach a point where it is producing the income or growth that you have aimed for. It should provide you a structure to help you stay in the game. An example of a purchase plan lets you:

  • Do your research
  • Define your strategy
  • Do your due diligence
  • Get appraisal
  • Set up your criteria
  • Cull your list
  • Make and offer
  • Negotiate

Set a budget

Budgeting is a great way to ensure you can balance your income and expenses. It lets you see where your money has been going, and allows you to plan for the bigger financial decisions. If you are having difficulty setting a budget, there are software available that you can use. It is extremely important to set this up first before you start searching for a property.

Stay up-to-date

There are plenty of tools available out there that you can use to stay up-to-date with investment trends and strategies. Knowing how the market moves is key to making the right financial decisions. There are websites that you can check for some valuable insights, too.

Staying informed means knowing how to detect schemes and peddlers. If somebody promises you overnight success, then simply turned down the offer and walk away. A lot of people get victimised by too-good-to-be-true offers because they failed to get themselves well-informed.

  • August 22, 2017