Buying Investment Property 4 Steps of Buying a Real Estate Investment Property by Yoana Leusin May 14, 2018May 8, 2018 by Yoana Leusin May 14, 2018May 8, 2018 How to start making money in real estate? How to start a real estate business? The answer to these questions is simple: you start investing in real estate. Even if the answer is humble, it might be challenging to actually go about buying an investment property. However, if you are new to investing in real estate, do not worry, because we have prepared a step by step guide. It includes only 4 steps. We will discuss how to find the best real estate investments. Moreover, we will present the importance of comparative market analysis as well as investment property analysis. Finally, we will reveal the secret of how to buy an investment property. Sound fascinating? Indeed it is since you are only 4 steps away from making money in real estate. Interested to know how after buying an investment property, you will be making money in real estate? Then keep on reading. #1 Buying Real Estate Investment Property: Do Your Homework It is a rookie mistake to start investing in real estate without certain preparation. We do not mean college and an official real estate education, yet it is a huge plus if you have one. Still, even without the official education, you may end up with the best real estate investments. All you need to do at this stage is to take a close look at the aspects below. Type of the Property If you are a beginner real estate investor, consider investing in small properties. Search for a duplex or an apartment. Of course, purchasing a large rental property or real estate investment property sounds attractive because of the large profits it may bring. However, such large investments may bring a headache as they will generate more costs and most probably require more efforts from the side of the investor. Rental Property or Fix-and-Flip Another thing a real estate investor should decide on is the investment strategy. Some of the most profitable ones are income properties and fix-and-flip properties. Let’s examine each strategy separately. Rental properties are one of the most common ways of making money in real estate. When dealing with income properties, you do not necessarily need to be 100% involved. All you need to do is to find the perfect location, choose the rental strategy and find tenants. However, fix-and-flip is a more dynamic strategy. Fix-and-flip requires your full attention, as you are the one who is involved in finding, fixing and selling the property. The secret of success with this strategy is that you need to find a real estate investment property that requires minimum repairs in order to maximize the value of the investment with minimal costs. Real Estate Agent One more thing you should consider is the need for hiring a real estate agent. A real estate agent operates as a middleman between the real estate investor and the income property’s seller. The biggest advantage of hiring a real estate agent is that he/she is the one who does the research, selects the best real estate investments and negotiates for the best property price. Nonetheless, you will need to pay for his/her services: the more experienced the real estate agent is the more expensive his/her services will be. #2 Buying Real Estate Investment Property: Arranging the Financial Part You should think about the financing options from the very beginning. Arranging the best financing for your potential real estate investment property is as important as finding the rental property with a high return on investment rate. Our advice is to go to the bank and have a consultation about the possibilities of borrowing money in order to know how much you can get. The amount you get from the bank depends mainly on your credit history, monthly income as well as the property price. Moreover, if you get a “NO GO” from the bank, there are different ways of getting money for your future real estate investment property. For instance, you may find support from private lenders, such as your friends and/or family. Moreover, you may apply for a hard money loan. Interested to learn about various financing options, make sure to read “The Investment Property Financing Tips That Every Real Estate Investor Needs.” #3 Buying Real Estate Investment Property: The Rental Property Calculator is the Only Tool You Need As a real estate investor, in order to find a profitable real estate investment property, you need to conduct several analyses, such as comparative market analysis as well as investment property analysis. However, it can take weeks or months to conduct both comparative market analysis and investment property analysis. The reason for that is the need for real estate investors to gather data, use spreadsheets and calculate real estate metrics such as cap rate, cash on cash return and return on investment manually. But nowadays, the majority of real estate investors are using a rental property calculator. Why is this so? The biggest benefit of this tool is its efficiency of saving the investor’s time and energy. The rental property calculator needs only a couple of second to compute cap rate, cash on cash return and return on investment rates. Moreover, this tool is able to save the required information. This allows the real estate investor to access the data whenever there is a need. Curious to find out where to find a rental property calculator? Make sure to read “Where Can You Find a Rental Property Calculator?” However, why should you use Mashvisor’s rental property calculator? Well, Mashvisor’s rental property calculator does much more than only calculating cash on cash return, cap rate, and the potential rental income. Mashvisor’s tool can provide you with a detailed neighborhood analysis as well indicate the optimal rental strategy for your real estate investment property. Through the neighborhood analysis, you can learn if the particular area will be profitable for your income property. By using the tool, you will be able to find all the answers you need about a selected real estate investment property anytime and anywhere. #4 Buying Real Estate Investment Property: Making the Offer The last step of becoming the owner of an income property is making the offer to the seller. As you have conducted real estate market analysis and investment property analysis, you should know the value of a particular income property. Consequently, you will be able to detect when a seller tries to sell for a higher property price than the value warrants. After you have made the offer to the seller, negotiation begins. You should be well prepared as there are tough sellers who are not willing to lower the property price. Want to know how to save money when making an offer? Make sure to read “How to Save Money: Negotiating and Reducing Real Estate Closing Costs. ” To learn more about real estate investing for beginners, continue reading our blog. Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL 0 FacebookTwitterGoogle +PinterestLinkedin Yoana Leusin Yoana is an experienced content writer with a BA in leisure studies who enjoys giving tips to beginner real estate investors. Previous Post The Best Places to Invest in Vacation Homes in Southern California Next Post How to Calculate Cash On Cash Return for Rental Properties Efficiently Related Posts How to Find Positive Cash Flow Properties in 2021 5 Property Valuation Methods Every Real Estate Investor Needs to Know Is Buying a Condo a Good Real Estate Investment? Buying a Cash Flow Single Family Rental: 5 Steps Real Estate Investment Advice from Expert Investors Los Angeles Real Estate Market 2018: Top 4 Reasons to Invest Here Investment Property Financing: 4 Efficient Methods Abandoned Houses: Should You Invest in One? How? Why You Need a Home Appraisal Even If Paying Fully in Cash Where to Find Homeowner Information for Investing Orlando Real Estate Investing: Choose from These Neighborhoods Is It Smart to Buy an Investment Property for Sale Near Me?