Define your objective
Are you seeking immediate cash-flow, long term appreciation, or perhaps a combination of the two. When reviewing properties and working with your trusted advisor, it’s important to have a clearly defined objective to help you search for and select the right property.
Identify an investment area
If you would like to stay inside a specific area, or near a certain portion of a community, be sure to include that in your investment plan. Your buyer’s representative will limit their search to the area(s) you are most interested in.
Financing for an investment property is a little different than your primary residence. Lending requirements typically provide for a 25% down payment, and generally a slightly higher interest rate. Ask for a pre-qualificiation letter from your lender and confirm it will allow you to purchase a property that meets your objectives
Select a Buyer’s representative
The representative you choose to help you purchase investment property is an invaluable part of your success in meeting your investment objectives. It is recommended to select a buyer’s representative who specializes in investment real estate, rather than one who works with families to purchase their primary residence. Your investment agent will use tools and resources like Rentlyzer to identify top-performing properties in the areas you are interested in, and be diligent in reviewing the financial performance of the property, as well as other physical characteristics.
Form a management plan
Self managing may be attractive, but you will find that a professional manager will help you stay in compliance with laws and regulations, enforce the lease by strictly collecting rent and charging late fees, and also help you charge the property rental rate, with annual increases. As you near the closing of your property, a speak with a professional manager to learn more about their services.
Review opportunities & choose your property
Your buyer’s representative will search for opportunities in your defined investment area and present the results. Review critical details such as cash on cash return and accumulation of wealth. Compare the quality of schools and other key demographic and location information. Once you find your ideal property, it’s time to make an offer!
Closing the Acquisition
With your property chosen it may seem like the hard part is over, but there is still work to do. Once you have an accepted contract, you’ll work with your buyer’s representative to schedule an inspection, appraisal, and negotiate any items which are discovered during the due diligence process. You will work with your lender to wrap up the financing, and then head to closing!