FIRST TIME INVESTOR

TIPS ON HOW TO FIND AND BUY INVESTMENT PROPERTIES

1. Find a great neighborhood (location, location) and then investigate all potential properties. Invest in a desirable and established area. If you find an up and coming neighborhood where property values are on the rise, look for a property that is the least expensive in the area, however if it needs improvement take this into account on the final offering price.

2. Use the Multiple Listing Service (MLS). As a first time investor, you will most likely be far better off if you purchase a property that is actually already listed for sale on the MLS and let an experienced agent help find the property for you.  This will provide you with more options than if you are hunting on your own.

3. Be cautious of real estate investment programs that promote huge earnings on little or no investment. In most cases you will find that you must make a significant investment (down payment). Don’t hold out for that “no money down deal” because they are very rare and you will be disappointed. Have funds available for a down payment of 15% - 25% of the purchase price.

4. Develop relationship with an experienced agent:  It is best to work through one agent that you trust, rather than to use a campaign where you contact many different agents. Quite simply, the agent that you build a good relationship with, and understands what you are looking for, will bring you the best and hottest properties first.

5. Avoid “For sale by owner” properties: First time investors should be avoiding properties that are listed as “for sale by owner”.  The reason is that in many cases, other investors have purchased these properties and are simply testing the market to see how much they are actually offered. The frustration of dealing with the logistics of a “for sale by owner property” may be complicated and the process and you may end up paying too much for the property.

6. Establish how much you can afford to buy:  It is a waste of time and energy for both you and your agent, if you are looking for properties that may be beyond your affordability range.  Establish how much money you will have available for down payment, closing costs and possible renovations.

7. Always try for a VTB mtg. on your purchase:  A Seller take back mortgage is a huge benefit.  A VTB “First Mortgage” would be the ideal scenario because it will increase your ability to borrow more money from the banks, however even a small second mortgage. will allow you to free up some funds for another purchase or for much needed renovations.

8. Find an experienced Real Estate lawyer: You can avoid unnecessary grief by using a good Real Estate lawyer. Get references and establish yourself with an experienced lawyer that you can depend on. I can’t stress enough that you should never retain a lawyer based on fees alone. This is a typical rookie mistake.

9. Find the right Lender and get prequalified: You should research in advance and know which lenders will entertain financing for your purchase before you begin searching. This will bring confidence when presenting the offer. It will expedite the process and most importantly will avoid unnecessary delay in the financing condition.

10. Find an Insurance Company that will work with you:  Insurance coverage is overlooked by most new investors, but it could be a deal breaker. Lenders will not lend without proper coverage. Establish which insurance company will insure your investment properties.  With all the new fire, safety and electrical regulations, you should find a broker that is familiar with investment properties.

11. Buy cash flow, because “Cash is King”: You are buying an investment property for the income (return on investment), not the bricks and mortar. Don’t be fooled by the so called “future potential income”.   You want instant income on your investment...if there is no immediate return on investment then be prepared to walk away from the deal.