4 Steps to Buy Smart as a Real Estate Investor
It’s mostly about the timing but here’s my best advice on getting started as a real estate investor.
Get a trusted agent who is focused on building a relationship with you as an investor.
If you are buying in Louisiana, I can build a plan with you, but if you are not in Louisiana, here are some things to look for.
Will the agent speak with you and answer your questions before you have a preapproval? If not, it does not mean they aren’t a good and knowledgeable agent; in my opinion it simply means they aren’t as patient as I believe an agent should be with their clients. Every agent has their own style, but if you are like me, you want someone who is a patient guide.
Yes, we are in business to make money, just like you are as an investor, but part of building a good business is building relationships. That’s one of the things I believe in.
Know your wallet
You probably already know how much cash and liquid assets you have, and if those are enough, then you already know your wallet.
But if you’re aiming at properties above what you have on hand, I have a few bankers that I have established a relationship with, so if you don’t have a banker, you also want an agent who can direct you to the right lender based on the kind of financing you’ll need. This also means you want someone who understands the requirements of mortgages and can help you shop in the right areas.
You’ll need to know how much you can be approved for and how much you have saved.
Knowing your budget is crucial to Tip 3 below.
One of my current clients commented that he knows he can trust me because I knew the rental requirements if he purchased a USDA zoned property. This helps him choose a property that can still yield him a monthly profit with the rental rates he will be restricted to under the USDA program.
and that brings us to…
Be ready to move fast
Making money on investments means you have to grab things quickly. You do not want to hesitate and end up in a bidding war that will drive up the price of the property.
Knowing your wallet will allow you to make quick decisions when I (or some other agent) suggest a property for you.
Be adaptable
It’s important to not get trapped to a specific area or type of property. Some clients only want to buy in an area they have heard is “hot.” Others have an ideal property type in mind and will frown on anything that doesn’t fit their pre-made expectations.
Making money on investments means buying something that can turn a profit. This means anything that is priced low and has high profit potential is a good buy.
And that’s it.
Now you’re next step today is to get a pre-approval going. This won’t affect your credit score because of how the banks process them.
Here’s the link to one of the bankers I work with often. Click on her name to visit her direct page:
Shawn Rogers
Here’s what you need to give the bank:
Your basic info: SSN, income tax for previous 2 years, last 30 days income records,
and if you plan to live in part or all of the property or not. If you will live in part of the property, even if it is a multiunit location, your downpayment is lower.
If you are interested in USDA areas, let them know that as well. USDA loans have low to zero downpayment.
Remember that if you plan to rent all or part of the property, mention this to the bank. They will include the rental estimates as part of your income.