Real Estate Investing - First Time Real Estate Investor
Buying a home or an investment property for the first time can be very exciting
- and very risky. In fact, the excitement that you feel sets you up for even
more risk, because you may move before the time is right, or not take the
time to consider all of the aspects of the transaction carefully. Many first
time buyers find that they lose money or actually realize the risks involved,
simply because they moved too fast, or because they were not sufficiently
informed.
Real Estate Investor - What You Should Know
Before you consider investing in any property, it is important to learn as
much as you can. You don't need a degree in real estate, but you do need
to know, at the very least, some basics, and you do need to think about your
own situation very clearly. Buying and selling real estate is not like buying
and selling stocks, or like buying or selling a car. It's much more complicated
than that!
First, you need to know about the market that you are interested in. What
area are you looking at? What is the average price of a property in that
area? How does the property that you are looking at compare in price with
other like properties, in that same area? Look on the Internet and talk with
local realtors to find this information.
You need to know about legal restrictions, requirements, contracts, escrow,
titles, insurance, and closing procedures. You need to know what professionals
you will need to hire for each step of the transaction, how much those services
will cost, and why - or if - they are necessary. Each of these things can
be found at different prices, and closing costs can be negotiated. Find out
what your options are.
Real Estate Investor- The Property
Once you know these things, you are ready to look for actual property in
the area that you desire. You can hire a realtor, use the Internet, or look
for properties that are being sold by the owner, without an agent. Don't
discount rental properties - often landlords will sell their rental property
outright. Check with the local courthouse to find out about foreclosures
and properties that have tax liens as well.
Don't just look at the property that is for sale. Look at the properties
that surround it as well. Are those properties well maintained? What about
the crime rate in that area? Stop by the local police department and find
out. Find out about recreation, shopping, schools, and other things that
relate to the property as well. All of this has a direct impact on the value
of the property.
Real Estate Investor - Financing
Some buyers secure financing, or the promise of financing, before they even
begin their search. This saves them alot of disappointment in the future.
For instance, their lender may be only willing to finance a certain dollar
amount. If you found a home that greatly exceeds that dollar amount, you
would be required to provide the difference in the form of a downpayment.
Whether you do it before you find property that you want, or after, you will
most likely need financing at some point.
Shop around for lenders. Credit unions, banks, and mortgage lending companies
are all possibilities. There are even Internet specific home loan companies.
Talk to them about how much you want to put down, the median price of the
home you are seeking, and find out what they can do for you, and how much
they will charge for doing it, in terms of interest and fees.
There are numerous financing options as well. Make sure you ask about the
various financing options, and find out how this affects you in terms of
taxes, payments, and the downpayment.
Real Estate Investor - Negotiating
Next, start negotiating. Don't assume that the asking price is the price
you are going to pay! That is, after all, just the asking price. It is almost
always open to negotiations, and the seller probably already has a lower
dollar figure in mind that they are willing to accept. It is their job to
get the most money that they can for the property, and your job to find the
lowest price that they will accept.
Start by finding out the asking price, then offering a much lower price.
This will typically go back and forth, until you both reach a price that
makes everyone happy. Sometimes getting a lower price means compromising
on something else, such as paying all of the closing costs, giving the current
owners more time to move out, or something else.
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