How To Ensure Your First Investment Property Isn't A Bust

Investment property is a prime way to start your real estate portfolio and get in on the rental game. While it can be easy to get caught up in the excitement of making your first property purchase, it is important to take it slow and proceed with some caution. Jumping the gun on a property can be a costly lesson for buyers to learn. You could end up with an investment that costs far more than you bargained for.

Heed this advice from Connect Property Investments Company Team as they offer insight into buying your first investment property. You’ll be able to avoid the common pitfalls that first-time investment property buyers make and ensure your entry into the real estate market isn’t a decision you’ll soon regret.

1. Don't Be Too Eager

When looking for your first investment property, it's critical not to "chase the deal." I often see first time investors overpay for property because they are so excited and want to get started. Always know your numbers, and never exceed the right purchase price during the excitement of an auction or when negotiating with home sellers.

2. Spend Time At The Property

Sit in your car outside of the property from 6 a.m. to 9 a.m. and 9 p.m. to midnight before you commit to buying it. You will see what is really happening at the building and in the neighborhood during those times.

3. Check The Property's Value

Of course other factors come into play... repairs, updates, etc. However, follow this method and you will have the winning score.

4. Buy With Your Head, Not Your Heart

First-time investors don't have the luxury of purchasing an investment property on a "gut" feeling. In fact, you probably need to buy on a bigger margin to account for all the things you know, the ones you don't know and a buffer above and beyond that. Buying investment property can be expensive, so one or two bad choices can take you out of the game. Only buy if the numbers really make sense.

READ: Eight Things You Need To Know Before Buying Your First Investment Property

5. Focus On The Location

As a first-time buyer of investment property, the key tenets of real estate are location, location and location. If you buy an asset that "carries" itself, i.e. pays for taxes, insurance and maintenance plus provides some free cash flow, the chances are, given decent duration, that the appreciation will provide good investment returns from opportunities to refinance, higher rental incomes and sale prices.

 6. Get Your Numbers Right

Too often, I see new investors purchase a flip deal without leaving room for error. In a market that's been hot for a while now, real estate wholesalers, agents and brokers have no problem selling you deals that don't make sense. Buy flips where your all-in cost is less than 68% of fair market value. This way, if the market does correct, you have the best chance for a clean exit.

 7. Always Be Patient

Real estate is a cyclical industry. Even if asset prices were to fall, you don't necessarily lose money/profit on the investment. The beauty of real estate is that there is an asset backing your investment. You can get creative about your exit strategy and explore refinancing or renting to get cashflow, rather than a sale. Over time, the prices are bound to rise again; all you need is patience.

8. Have A Buddy System

Don't do your first investment alone! Make sure you are getting professional advice to make sure you are missing the little things that cost the most. Team up with an experienced person on your first couple of investments until you get a template in place.

9. Just Do It

I hear frequently the lament "I wish I could get into real estate." With the onset of short-term rentals, acquiring rental property is more profitable than ever. Location, location, location to capture the increased tourist market in an area is still a great piece of wisdom. Know what local rates are on long-term rentals, as well as comps from short-term rentals, and leverage the intel for funding.

READ: Grow Your Real Estate Investment Portfolio, Part I: Understanding The Benefits Of Rental Property

10. Choose Between Active Or Passive Investing

Active real estate investing is both time-consuming and hard to be successful at if it’s not your primary job. Most first-time investors lack the time, tools and experience that professionals rely on to avoid common pitfalls. Building experience incrementally through passive investing can be a great way to start. After learning more, you can then evaluate if becoming more active is right for you.

Real estate investing is hyper-local, so it is critical to have a market expert like me who can guide you through the process. Together with my partners at Connect Property Investments Company, we can determine which investment properties would work best for you, how to finance the purchase, and how to manage tenants or short-term rentals.

Let’s get started today – I am ready to help you find your next real estate investment.

I look forward to hearing from you and, as always, I am available for any of your real estate investment or acquisition questions or needs. Look out for my next article on my next post.

You can reach me via email [email protected] or via whatsapp +2349021812904 to discuss how you too can become a proud owner of diverse real estate portfolio.

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