Tips on Buying Your 1st Investment Property #1

Buying an investment property is a great way to earn extra income and build long-term wealth. However, there are many considerations that go into buying your first investment property, especially in the current real estate market.

1. Do Your Own Research

The advice I would give to someone looking for their first investment property is to never listen to the numbers the brokers have given you. Do your own due diligence. Find out the numbers yourself and do the math yourself. Due diligence is your get-out-of-jail-free card, so use every moment to turn every stone on the property. If something gets missed in the due diligence period, it is your fault.

2. Educate Yourself

Real estate investing is not passive. Get educated, ask a lot of questions and don't rely on a single source for answers. Run all your own numbers and proformas from scratch, rather than relying on anyone else's, and include taxes, maintenance and all fees and carrying costs. There are many investment associations as well as online resources.

3. Know Your Goals

Remind yourself often of why you're pursuing real estate investing. What investment goals are you working towards? Make sure the property and investment terms meet your objectives. Talk to other people who have done it and be realistic about the time commitment of managing the property.

4. Keep It Simple

Your first property should be an easy one. Buying a property for a realistic price with conservative leverage and some cash flow is what you want. If it's a bargain, there's a reason. The stories about first time-investors getting in over their heads are real. Recognize that you probably have a lot to learn and you want some training wheels for your first ride.

5. Start Locally

Start local. Every market has investment opportunities. There is no such thing as a "starter investment market." Your local market might not be good for rentals, but find out what is working locally and find a professional to help. Be involved in the process! You will gain experience which is very important in real estate.

to be continued....