Buying your first investment property can be a major challenge if you just starting out as a potential landlord. Being a landlord is a desirable goal because it allows you to build a recession-proof asset in your properties. Before you can get to many properties, you have to start with one property. This chapter will examine three key things you need to know in order to have your first buying experience successful. It is important to note that your profit comes from when you buy a property. Selling a property is only a capital gain and you lose a potential continual source of income. This principle will help set the grounding as we explore things to remember when buying investment properties.
Buying my first investment property was a great challenge as I had to find people who had similar goals to myself. Real estate is not a get rich quick scheme. Property investment is about finding a good balance between rental property and properties which can be sold for a profit. Creating this portfolio takes time and discipline. It also takes good people who will commit to a long-term journey of building a portfolio. The right people make all of the difference when having to commit to the proper discipline of building long-term residual income.
See also: Property Management 101: Getting Started
It is important to get a bargain on the buying price. Profit comes in the process of buying the house because the deal you get on the front end sets up your capital gain on the back end, if and when you sell. My first investment property; however, was a single-family home which needed a little cosmetic work. I chose this kind of property because it gave me a simple source of stable rental income which I could use to build my business and I was not advanced in property management. I wanted something easy to manage which I could do with a short staff.
It is also important to not overextend yourself. Focus on one property at a time and you will have more success. When buying my residential home, a commercial buyer was trying to get a loan for my house and another at the same time and failed to get both of them. This left a nice opening for me to buy the house in which I am currently living. However, as a business person this is a mistake you want to avoid as tying yourself in excessive paperwork is time spent not making money because no one pays rent to you if you are still stuck in escrow. Focusing on one property at a time, especially as you are making your start in property management, can go a long way to building a stable portfolio for the future.
Investment properties are a great way to secure your financial future. The consistent need for people to have places to rent always puts your property with a decent level of demand. The biggest challenge is always securing the first property. However, with the right team dedicated to a long-term vision, you can build a portfolio which can accentuate or be your sole source of income for many years. Buying your first property can be a difficult step. Hopefully with this guide you feel empowered to buy your first investment property.