Deciding to buy investment property is one of the best decisions you will ever make for your future. However, it isn't something you can decide to do one day and then rush out and do the next. There is a process that you have to learn and lots of information to digest. If you think you have done that already and you are now prepared to go out and make your first purchase, here are 5 questions to help prepare yourself.
What type of investment property are you interested in? Are you interested in a duplex, multi-unit complex, or perhaps just a single family home? Are you interested in hotels or motels? What about raw land? How you answer this question will determine other things that you do later, such as how you decide to actually pay for the property. It is also best to focus on a particular type of property so you don't go on wild goose chases and so your team knows what they should be helping you with.
What area am I interested in? Are you going to invest in the city where you live? If not, what part of the country are you interested in? The Internet is the best tool for determining what area of the country you would like to put your time and resources into. Ken McElroy, author of “The ABCs of Real Estate Investing,” calls this Level I research. Later, once you have decided on a part of the country and a city in which to look, you will need to decide on a neighborhood. You will discover that during McElroy's Level II and Level III research.
Do you have a financing strategy? The type of investment property you are looking for (as well as your existing equity) will determine how you can buy the investment. If it is a smaller investment such as a house, you may choose to pay for it outright. However, even if you don't have the finanacing in place, if it is a piece of property that has made money in the past, the bank will probably give you the finacing you need. They know that they will get a ROI regardless of what happens to your investment. If you are looking at a larger piece of land that you can't afford outright, you will probably be able to find other investors to partner with you.
Do you have a team in place? It's just too hard to be successful at this without a good team. That is simply because of the large amount of work involved, and so many disciplines of knowledge involved, that you simply can't do it all. You won't have enough time to become skilled at real estate law and accounting, plus broker your own deals and manage your own properties. It is necessary to delegate. That is why McElroy recommends you start with a lawyer, an accountant, a broker and a management company. After that, you may also need appraisers, tax consultants, a surveyor, a structural engineer, an architect, an estate planner and more.
What is your repair budget? This is essential. Knowing this will help you choose the areas of town to look around in because some areas may be full of old buildings or some newer buildings may actually be in serious need of repair. You will want to what you are getting into and whether you can handle it.
This is by no means a complete list of questions. Once you start your real estate investing adventure, you will discover a consitent list that you will need to pay attention to. But these will get you started on the road to asking yourself the best questions. Sometimes asking the appropriate questions is more effective than the answers themselves.
FREE EBOOK FOR YOU
What type of investment property are you interested in? Are you interested in a duplex, multi-unit complex, or perhaps just a single family home? Are you interested in hotels or motels? What about raw land? How you answer this question will determine other things that you do later, such as how you decide to actually pay for the property. It is also best to focus on a particular type of property so you don't go on wild goose chases and so your team knows what they should be helping you with.
What area am I interested in? Are you going to invest in the city where you live? If not, what part of the country are you interested in? The Internet is the best tool for determining what area of the country you would like to put your time and resources into. Ken McElroy, author of “The ABCs of Real Estate Investing,” calls this Level I research. Later, once you have decided on a part of the country and a city in which to look, you will need to decide on a neighborhood. You will discover that during McElroy's Level II and Level III research.
Do you have a financing strategy? The type of investment property you are looking for (as well as your existing equity) will determine how you can buy the investment. If it is a smaller investment such as a house, you may choose to pay for it outright. However, even if you don't have the finanacing in place, if it is a piece of property that has made money in the past, the bank will probably give you the finacing you need. They know that they will get a ROI regardless of what happens to your investment. If you are looking at a larger piece of land that you can't afford outright, you will probably be able to find other investors to partner with you.
Do you have a team in place? It's just too hard to be successful at this without a good team. That is simply because of the large amount of work involved, and so many disciplines of knowledge involved, that you simply can't do it all. You won't have enough time to become skilled at real estate law and accounting, plus broker your own deals and manage your own properties. It is necessary to delegate. That is why McElroy recommends you start with a lawyer, an accountant, a broker and a management company. After that, you may also need appraisers, tax consultants, a surveyor, a structural engineer, an architect, an estate planner and more.
What is your repair budget? This is essential. Knowing this will help you choose the areas of town to look around in because some areas may be full of old buildings or some newer buildings may actually be in serious need of repair. You will want to what you are getting into and whether you can handle it.
This is by no means a complete list of questions. Once you start your real estate investing adventure, you will discover a consitent list that you will need to pay attention to. But these will get you started on the road to asking yourself the best questions. Sometimes asking the appropriate questions is more effective than the answers themselves.
FREE EBOOK FOR YOU
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