Congratulations! You’re on the road to securing the purchase of your first real estate property, which is a very important milestone in every person’s life. Some opt to buy real estate to live in, while others see it as an investment opportunity. Whatever your motives are, you want this significant investment to deliver what you expect from it, but you might feel overwhelmed or afraid because you have no experience in the field.
Luckily, many people are happy to share their advice and experience with those who are about to buy their first real estate. We have compiled a list of the most commonly given tips by seasoned buyers and realtors to help you go through the process as smoothly as possible.
Be Aware of What You Can Afford
It’s amazingly easy to dream about a home you’ve seen in a magazine or online, but the reality is usually much different. You have to ask yourself if you can afford such real estate at this stage. To get the answer to that question, you need to know exactly how much you can afford to spend. That means you should be very familiar with your personal finances, keep track of your credit score and try to improve it as much as you can. A loan will be approved much more easily if your credit score is better, so make sure you do something about it. Also, you need to think about the down payment. As a first-time buyer, you are likely to be asked to put up a higher amount as a down payment, so make sure you have the necessary funds.
Analyze the Market Carefully
Before you put an offer on a home, you need to have a very good picture of the situation on the market in the area where you’ll be buying. That means you should monitor the prices for some time and pay special attention to the length of time that most homes in your price range stay on the market and whether there are any major shifts in the asking price. If you are not sure you can do this properly, the best thing to do is find a reliable realtor to help you.
Calculate Expenses (and Profits)
It’s vital to take into consideration all the expenses related to your purchase, which means you can’t only look at the price of the property. You might need to invest in renovating the house, especially if you’re planning on renting it or selling it quickly to make a profit. If you do the math correctly, you’ll see if you can make any profit, based on the expenses you are expected to have and the realistic resale price of the property. Make sure to leave a certain margin in case there are some unexpected expenses that need to be paid. That’s why it’s important to run a reliable credit check before signing anything. You shouldn’t spend all the money you have on the property since you might need to splash out some cash for works you haven’t anticipated, which brings us to the next tip.
Make Your First Investment Property a Low-Cost Home
This is important, especially if you are buying your first investment property. Staying in the safe-zone when buying your first house is a sound move. That way, even if you lose some money, your loss won’t be that high and you’ll stand better chances of recovering from the loss. Also, most people don’t need to buy an expensive house, especially if they have no experience in the field of real estate. If you stay realistic about your needs and financial ability, you’ll have much better chances of making the right call.
Pay Your Debts
You need to seriously consider the investment loan options as a new investor and you should by no means carry debts with your investment portfolio. That’s why you need to clear all of your debts, such as student loans and medical bills, before starting out in real estate.
List Your Priorities
When you know exactly how much you can afford to spend, it’s time to start looking for a home among the listings in the area of your choice. Chances are you won’t find a place that fulfills every single item on your wish-list, but you definitely need to have a list of priorities to ensure you know what to look for when making a purchase. Everything else that a house offers is simply a bonus, but make sure you find a place that boasts all the items from your priority list.
Find an Agent
Now that you know both how much you can invest and what kind of place you’re looking for, it’s time to turn to professional help. Find a real estate agent who can help you find exactly what you want. They can also facilitate negotiations with the seller or show you similar properties that fit your budget and meet your needs.
Making an Offer and Negotiate
Your real estate agent will also assist you in making an offer that includes a fair price. It’s a wrong approach to make a low-ball offer since it can easily put the sellers off and they won’t engage in further negotiations. This is why it’s important you find an agent you can trust and who is knowledgeable when it comes to the housing market and the rules that apply to home offers.
Organize Inspections and Secure a Loan
Don’t skip home inspection as a part of the home-buying process and don’t treat it as an expenditure, but rather as an investment. You want professionals to inspect the house you’re interested in, since only they can establish if there is some damage or signs of structural wear. That might have a great impact on your offer and the budget you have in mind. After the inspection and the appraisal of the property, you can secure your loan with a bank or lender.
Submit Paperwork and Rent Out the Property
Make sure all the paperwork related to the purchase is in order. If you are not certain, your agent should help you with it, so that you can focus on getting the property ready for tenants finally. Once the paperwork has been completed and the seller of the house has been paid, you’re free to enter the first home you’ve purchased on your own.
Your investment can go either way. It can turn into a disastrous experience or you can get exactly what you want and need or even make some profit if you’re selling the place quickly. To make sure the latter scenario applies to you, follow the tips above.
This article has been contributed by Diana Smith.