7 Things to Consider Before Acquiring Your First Investment Property



As a beginner in Real estate business, getting your first property is always a challenge. If the investor does not know what to look for, then chances of failing in the real estate business are so high. What should an investor consider to be successful in real estate industry and buy a first investment property with ease? The following seven tips answer this question.

A close area to your home
One should look for an area close to his or her home. A property near investor’s home will help in determining whether the real estate business is growing or not. Besides, it enables the investor to get access to brokers who operate in that area quickly and get the required information from them.

Value investment
Strives to be a value investor, who acquires property according to its overall value, both short and long terms. A value investor looks for a property with both capital gains and cash flow.  Capital gains, means you are buying the property at low prices and selling it when the prices are higher. Cash flow means you hold the property for the long term to benefit from its continuous passive income. The cash flow and capital gains are the best methods of realizing benefits from the real estate investment, and they have a chance in the real estate investor’s portfolio.

Start small
Start out small and invest lots of time learning and a little cash in your first real estate investment. Starting small will keep your risk low as you keep gaining experience.

Be ready to make mistakes
Everybody is bound to mistakes. Do not perceive your mistakes as a setback, but, as the forward strides in the learning curve. Starting with a positive cash flow is necessary because it will help in reducing the possible mistakes that might happen.
Affordability
Determine what you can pay for; find the amount the property is going to cost you for the amount of cash flow you expect. You should ask yourself the following questions to get a good property deal.
  • If the property has maintenance issues, can I afford it?
  • How can I afford the property, if the renters moved out and the property stays vacant?
Look for properties with problems
Seek a property that someone has left because of problems. Plan ways to deal with the problems and then increase the value of the building. If the issue of the property is short-term rentals, then improve its qualities and convert it to long-term rentals, this will reduce the property vacancy rate.

Pay attention to the numbers in the pro forma
The figures in the pro forma are crucial for a real estate investor. They state whether the property is qualified for more review or not. Pro forma contains lots of information which form a topic of their own. The number of cash on cash return is one of the examples in the pro forma. The higher number of the cash on cash return is a sign of a potential property for investment.


Getting first real estate investment as a beginner is not easy, but, when an investor follows these seven tips, he or she has high chances of success in  acquiring first investment property. 

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