4 Things You Need to Know Before You Buy Real Estate
Have you thought about buying a house or becoming a real estate investor?
Here’s the deal...
Real estate can be a tricky process for beginning investors as well as first time home buyer’s. Not only that, it can be costly. For 25 years I have worked in real estate, helped others sell or buy a home and assisted investors with learning how to profit. Most often people who are not knowledgeable about real estate find themselves with a lot of questions than answers. To avoid this experience, which could lead to loss of time, effort and even worse your money, learning the common mistakes that are made in real-estate and how to avoid them is a great place to start.
If you are new to real estate investment, The Good, the Bad and the Ugly of Being a Landlord would be a great place to start.
The following four points will help give you clarity in the home buying or investing process.
• A lack of research can cost you thousands
Research is the cornerstone of validating a process to prove it worthy of its worth. When buying properties and houses, there is nothing wrong with going back to the basics as with learning anything from scratch. Do some research before proceeding with any kind of purchase. By researching, you begin by asking questions about the house property. Ask questions like the following to get an overall idea if this piece of property is for you.
a. What is the reason for putting the property on sale. b. Are there any problems about the house’s foundation that needs to be addressed.
c. If the former owners have paid for the house and the methods of payment.
d. If there are any problems in the area where the house and property is located like being near a flood zone, termite problems, etc.
e. If there are any problems in town area.
• Not factoring in the cost or issues associated with buying house
In researching for a property, consider the price. This happens prior to you putting an offer on a property. If you hire a realtor, he/she can do comparables in the area to make certain you are getting the best deal for your money. A realtor can check when a house sold similar to the one you like. It is a common scenario that a buyer offers a higher price for a property that fits their needs and demands. If you are working by yourself, make certain that you do this too. Especially when there are multiple people interested in it. You can find yourself in a bidding war and may end up paying more for the house than its worth if you are not aware. It is better to look at houses and properties that were already sold than those houses still up for negotiations or sale. A new buyer or investor should bid consistently with the other houses’ prices in order to get a good investment.
Aside from the upfront price of the property, a buyer working on his/her own may forget to factor in the maintenance cost of the house. Without considering the maintenance cost, home buyers may find themselves buried in debt with things that typically go wrong with houses. Not to mention, the expenses of being a new homeowner.
Real-estate investors should always keep the expenses in mind as well when buying property. Since the cost of improving the home would definitely have an impact on how they would price their house for a flip. I also recommend having the home inspected because this could put a dent in your bank account short and long term. Always get a good home inspector even if it means you would be spending more outside your budget. It’s better to be aware upfront versus learning something later on.
• Learn to be patient and wait
There is nothing wrong with waiting for the right house. A home buyer and an investor should be realistic. As a home buyer, it is difficult to find a home that would fit 100% of your needs and demands. Home buyer’s who are looking for homes with this method would usually bypass homes that would be meeting nearly all of their standards and are more than likely in their price range. You don’t want to be house rich and poor in your first home. Usually, home buyer’s who wait around for their perfect homes would not notice that the cost of purchasing properties is constantly increasing. To avoid this, it is important to sort out priorities, needs and specific desires. Identify your top ten and proceed from there.
• Not getting any professional assistance
Another mistake that most home buyer’s and investors make is that they seek buying a house on their own. There is nothing wrong with buying a property or a house without any professional help, but it could be very stressful and tedious. Again, not to mention very costly. Real-estate agents have the resources, contacts and tools that would be helpful as well as streamline the process to make the search quicker and easier.
Aside from hiring a real-estate agent, if you’re planning on becoming an investor, it’s best to build a team a successful team of professionals who are ready, wiling and able to assist you when needed. In the real estate industry a successful team consist of a licensed real estate agent, a certified home inspector, a real estate lawyer and an insurance representative. These four professionals can literally be your lifeline and your ticket to success.
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I’m Nichelle your life and business strategist. I help you start, market, grow and profit in your life and business. Subscribe to The People Connect Podcast for business tips, inspiration and motivation. Are you social? Let’s connect with me on Instagram.