You may have heard that the housing bubble has burst and there is little to no hope for investors, but that’s not true. If it’s a buyer’s market, it can easily be an investor’s market. What better way to start securing your financial future than to start investing young? The odds are in your favor more than you think. The banks have so much inventory, they’re almost willing to let foreclosures and short sales go without much of a fight. Home prices and interest rates are at historic lows. Young investors should take advantage of this opportunity and buy their first investment property. So what are the steps?
Find Your Investment Style
Real estate investors usually have a style that they prefer. You can be a landlord and have rental properties where your tenant pays the rent and you profit from that. There are investors who like to flip houses, meaning you buy a property, fix it up a bit, and sell it for a profit. You can specialize in apartment buildings, duplexes triplexes and fourplexes. Maybe you prefer commercial real estate, where businesses can open. Decide what you prefer, and go for it!
Find Your Partner
Since you’ll be a young investor, you’ll want to partner with someone who knows the market and can help you get started. Find a real estate agent or broker who is familiar with the area you’re interested in, and will want to work with you in the future. There are some investors who work with the same agent time and time again. You don’t have to, but it can be profitable for both of you. The agent or broker will help you find properties, and will give you the details and information you need for purchasing them.
Location, Location, Location
You wouldn’t buy a home in just any neighborhood if you were going to live there, right? The same goes for an investment property. Location is very important, so you should do your research ahead of time. This will match up with your style as well. If you’re going to be a landlord, you’ll want to find a property near places people will want to rent, maybe near colleges, a thriving business area, or entertainment. If you’re looking into commercial property, you don’t want to have a restaurant in a location no one is going to want to eat, or a business front all by itself. You can research online as well as going out and seeing for yourself.
Get Your Finances Together
Investing is still going to cause you to come out of pocket, even though it will be a method of passive income. You can’t buy a property without the necessary capital. You may want to meet up with a Certified Financial Planner before seeing a lender to make sure you’re ready to handle the ups and downs that come with being an investor. As a real estate investor, you’ll certainly experience your share of lows, including vacancies on your rental property, your property staying on the market longer than you’d like, and tenants no longer being able to pay the rent. Prepare for the worst situation. Also, ask about the different options for financing the property, including conforming mortgages.
Do Your Research
When you’re searching for your perfect investment property, you’ll want to know what other properties are going for in the area. You don’t want to pay a price that’s much higher than a similar building is going for. You can do this research on your own online at websites like Zillow and Redfin, or you can ask your experience realtor partner what they think. You’ll also want to know the history of the property, including what to expect in case of construction.
Don’t Fall in Love With the First Property
It’s going to take a lot of time and patience before you find the best investment property, so don’t fall in love with the first one. You’ll want to look at a variety of properties in different areas and different price ranges. The cheapest property is not always the best, and neither is the most expensive. Don’t make your decision in haste; take your time to weigh your options. An investment is a big deal and should not be taken lightly.
So are you ready to buy your first investment property? Find a CFP, a lender, and a broker, then you’ll be on your way to becoming a young real estate investor.