Making a real estate investment involves research, negotiations, lots of paperwork and, most importantly, money. Whether you are looking to buy a home or commercial building, take the time to plan and prepare for your transaction so that you can maximize the value of your time and money. Following are some tips to help guide you toward executing a successful transaction.
1. Make it a priority to locate realtors or agents that are highly trustworthy. Always choose your own, never rely on a seller to give you their agent or realtor contacts. It is critical that your agent stands 100 percent behind you, acting as your advocate, and has no connection whatsoever to the seller. Some agents would rather help a seller that they know will refer them future business, which will come at your expense.
2. Have your property carefully inspected. This is another area where you want to hire an inspector that is motivated to help you, rather than the seller. Make sure you find your own inspector through reliable sources, and that they have no connection to the property’s current owner.
3. Keep tabs on local events and developments as they pertain to real estate. Some unlucky investors have purchased buildings or raw land, only to find out that their new purchase was then re-zoned, to be used as a park or something else unprofitable and unsellable. Additionally, look at trends in the going prices per square foot for commercial space or residential homes, depending upon your targeted investment. If prices have been trending strongly in one direction or the other, factor this into your negotiations and the price you offer.
4. Find people willing to help you out with a down payment. If you have the monthly income to afford a property purchase but not a lump sum to put down, consider asking family or close friends if they are interested in investing with you in a property. You can either re-pay the down payment over time with a mutually agreed-upon interest rate, or return the money with an agreed profit percentage once you sell the property.
5. Network with investors and lenders that have the means to help you fund your real estate purchase. If you choose to buy a commercial building, for example, your cash needs could easily exceed the amount any friends or family is willing to invest. In this case, you may be able to find a private investor that will provide capital or a lender that can provide creative financing that will allow you to get your investment deal accomplished.
As you probably know, buying investment property is not as simple as letting your agent do all the work for you, unless you do not care about the quality of the transaction and your ultimate profit potential. You need to take an active role in every decision during your real estate transaction, to make sure that each step goes according to your plan and not someone else’s. Keep the above tips in mind, and hopefully you will soon be well on your way to a very profitable real estate investment.