Personal Development

The 3 Most Important Things to Consider Before Buying Your First Property

Expertise: Real Estate Investing Basics, Personal Development, Landlording & Rental Properties, Real Estate News & Commentary, Business Management, Flipping Houses, Real Estate Deal Analysis & Advice, Personal Finance, Real Estate Marketing
225 Articles Written
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In the past four years as a property investor and business owner, I have learned so much — some of which I wish someone would have told me as I began my journey because it would have saved me time and money. I would have been able to better focus on the deals that best fit me and my goals, rather than just investing based on speculation.

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This week I will share with you the three most important things every investor needs to consider before buying their first property. These may seem simple and basic, but if you have read any of my previous blogs, simple is definitely my style. I know that if it stays basic, I can duplicate it and teach it without losing clarity with all the confusing details.

So, here goes!

The 3 Most Important Things to Consider Before Buying Your First Property

1. Am I Connected With the Correct People?

Whether you’re investing in your backyard or in a differing state/country, you need the same thing: trustworthy people. Whether it be a maintenance guy, property manager, realtor or a contractor, your investment and your interests should be first priority.

Related: 3 Real Estate Investing Lessons I Wish I Had Learned Earlier

If you feel you’re being pushed into purchasing a property or a service, you have found the wrong people. The right people will guide you and have no problem developing the relationship over time. I mention this in the Bigger Pockets Podcast and various other media interviews.

2. Do I Know the End Goal for My Future Investment?

My last three BiggerPockets blog posts were all about developing your goals, managing them to accomplishment and sharing your vision with others to magnify your impact. In the investment world, you need to completely know and understand your goal, even if you don’t know how to achieve it. That’s what people like me are here for. Also, see #1.
But really, knowing what you want to accomplish in real estate to meet the demands for your lifestyle moving forward is very important. No one wants to lose money or find out 20 years from now that they fell short of where they needed to be. Time can be wasted and spent, but never returned.

3. Have I Considered a Solid Exit Strategy?

Life happens everyday. Investments are made in order to allow us freedom in our future, as well as to recover from unexpected events in our present. If investing in real estate, you have an option if the latter occurs — liquidate the asset. If investing in solid B class areas and entering the market at a below retail price point,, as we do here in Ohio, your exit will be fast and painless.

Other investors may want to buy you out or you will be able to list and sell on the open market. In many instances, your tenant may want to become the owner, which is always a good feeling to give someone a hand up. Just always keep the question in mind: if something unexpected happened, how quickly could you get out of the investment?

Conclusion

As I mentioned above, if I had known these three things several years ago, I would have saved a lot of time and money. Building trust and spending enough time establishing the right relationships can propel your investment in a positive direction. Developing your goals and talking with your loved ones about your family’s financial future is critical to your future success. Investing in sustainable markets that have sound B class areas and properties provide for a sound exit if needed.

Related: 12 Real Estate Investing Lessons Every Investor Should Know

What I teach and now practice was learned from experience. Over 400 deals in various capacities throughout my investing career provide me this insight. As I said, it is simple, but if you ask the right questions and follow the correct path, you will be successful.

In your future do you see the ability to be financially free? Do see yourself being able to retire at a comfortable age, still enjoying a lifestyle of your choosing?

Take some time over the next week to reflect on these topics, and start thinking about what the New Year brings. Your new future may surprise you.

Life is a series of experiences, each one of which makes us bigger, even though it is hard to realize this. For the world was built to develop character, and we must learn that the setbacks and grieves which we endure help us in our marching onward.” — Henry Ford

Readers, weigh in! What would you add to this list? What do you wish you knew when you were starting out in real estate?

Don’t forget to leave a comment below!

Engelo Rumora, a.k.a.”the Real Estate Dingo,” quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties. He runs runs Ohio Cashflow, a turnkey real estate investment company in the country (Inc 5000 2017 & 2018) and is currently in the process of launching a real estate brokerage called List’n Sell Realty. He is also known for giving houses away to people in need and his crazy videos on YouTube. His mission in life is to be remembered as someone that gave it his all and gave it all away.

    Timothy Trewin from Clarksville, Tennessee
    Replied over 4 years ago
    Engelo, Good article. It makes a lot of sense and is good to see articles such as this. Sometimes simple is the best way to go with this or anything truly serious. Thank you for taking the time to write this up.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 4 years ago
    Hi Timothy, Thanks for your comment. Over the years I have found that the above 3 strategies have assisted many investors in successfully buying their first property and building a strong foundation for future purchases. Have a great day.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 4 years ago
    Hi Timothy, Thanks for your comment. Over the years I have found that the above 3 strategies have assisted many investors in successfully buying their first property and building a strong foundation for future purchases. Have a great day.
    Timothy Trewin from Clarksville, Tennessee
    Replied over 4 years ago
    Engelo, Good article. It makes a lot of sense and is good to see articles such as this. Sometimes simple is the best way to go with this or anything truly serious. Thank you for taking the time to write this up.
    Eric Giovannucci Rental Property Investor from Vacaville, CA
    Replied over 4 years ago
    Engelo, Another great piece from you, your words are inspiring my friend. Hopefully this next week of preparation for the year will allow some great ideas to come to mind. Thank you for this.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 4 years ago
    Hi Eric, Thanks for your comment and kind words. It sure is looking like a crazy busy 2015. I need more good people on board to support the vision. That’s the hardest part In Real Estate or business in general. Finding the right people. Thanks again and finish well these next 10 days 🙂
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied over 4 years ago
    Before you buy: 1. You must have good tools for comping. You cannot trust anyone else (especially the seller) to give you the correct numbers. You MUST know what a property is worth before you can determine what you will pay. You need to know current condition value, repair costs, and after repaired value. If you don’t know your numbers going in, chances are you’ll get burned getting out. 2. Have multiple exit strategies. If you plan to sell and it doesn’t sell, can you put a tenant in it and hold it until it does sell? If you plan to put a tenant in and hold it but someone comes along who wants to buy, are you able to sell for a profit? If you plan to wholesale and it doesn’t, can you renovate and sell for profit? We always want 3 exit strategies because plans 1 and 2 can blow up before you know it! 3. And a team you can trust is imperative. Find money, attorneys, title companies, etc. from other successful investors. The best way to find great people is through referrals. Then, get started. The only way to really learn is by doing. Thanks, Engelo, for your post.
    Michael Williams Investor from Palmetto, Georgia
    Replied over 4 years ago
    Copied and saved into my beginners notes. Thanks for this great tidbit of information.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 4 years ago
    Thanks Michael, Have a great day.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 4 years ago
    Hi Karen, Thanks for your detailed comment. Your input is much appreciated 😉 There are so many things we could further add but as you mentioned. You will never learn how to swim until you actually jump into the water lol I lost between $300,000 – $500,000 when first starting. Some of it was personal cash and the rest “opportunity costs”. Sure did pay my way through “Real Estate College” hehe Thanks again and have a great day.
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied over 4 years ago
    Before you buy: 1. You must have good tools for comping. You cannot trust anyone else (especially the seller) to give you the correct numbers. You MUST know what a property is worth before you can determine what you will pay. You need to know current condition value, repair costs, and after repaired value. If you don’t know your numbers going in, chances are you’ll get burned getting out. 2. Have multiple exit strategies. If you plan to sell and it doesn’t sell, can you put a tenant in it and hold it until it does sell? If you plan to put a tenant in and hold it but someone comes along who wants to buy, are you able to sell for a profit? If you plan to wholesale and it doesn’t, can you renovate and sell for profit? We always want 3 exit strategies because plans 1 and 2 can blow up before you know it! 3. And a team you can trust is imperative. Find money, attorneys, title companies, etc. from other successful investors. The best way to find great people is through referrals. Then, get started. The only way to really learn is by doing. Thanks, Engelo, for your post. Reply Report comment
    Jenifer Smith
    Replied over 4 years ago
    I researched for a very long time and then I found the perfect match of a power team and how together with them I am now acquiring great investment properties that cash flow and will work in either an up or a down market! It is literally “real estate done for you”! http://www.cashflow-business.com Thank you to Strongbrook! 🙂
    Engelo Rumora Specialist from Toledo, OH
    Replied over 4 years ago
    Hi Jenifer, Thanks for your comment and well done on finding your power team. Have a great day.
    Jason Gray
    Replied over 4 years ago
    Good pointers, reversed priority though. A good team is the first step. A good team should be someone who can give you their opinion of the neighborhood you plan to buy in, that means your team doesn’t need a realtor, property manager, or paid professional at first. You need eyes, and someone with attention to risk as your first part of your team. Sadly, many real estate “pros” rely on realtors or agents who aren’t allowed to discuss their thoughts on the area… oh. And anyone you ever partner with, do a federal background check…
    Engelo Rumora Specialist from Toledo, OH
    Replied over 4 years ago
    Hi Jason, Thanks for your comment and added input. Having the eyes, ears, heart and soul on the ground is a must. Have a great day.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 4 years ago
    Hi Jason, Thanks for your comment and added input. Having the eyes, ears, heart and soul on the ground is a must. Have a great day.
    Melete Melake
    Replied over 4 years ago
    Engelo, Thank you. Great information!!
    Engelo Rumora Specialist from Toledo, OH
    Replied over 4 years ago
    Thanks Melete, Glad you found it useful. Have a great day.
    Melete Melake
    Replied over 4 years ago
    Engelo, Thank you. Great information!!
    Melete Melake
    Replied over 4 years ago
    Engelo, Thank you. Great information!! Reply Report comment
    Dilip Gandhi from Memphis, Tennessee
    Replied over 4 years ago
    Thanks Engelo for informative post.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 4 years ago
    Pleasure Dilip, Glad you liked it. Have a great day and weekend 🙂
    Kevin Darrell from New York
    Replied over 3 years ago
    Good article, definitely going to add to my notes being that i’m in the process of vetting turnkeys to buy my first property.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 3 years ago
    Thanks Kevin and sorry for my late reply 🙂 I hope you got your first property and that things worked out for you. Much success
    Kevin Darrell from New York
    Replied over 3 years ago
    Good article, definitely going to add to my notes being that i’m in the process of vetting turnkeys to buy my first property. Reply Report comment
    Carolyn Morales Flipper/Rehabber from Jacksonville, FL
    Replied over 3 years ago
    Never let tenants IOU on their deposit…never let a week late turn into a month or two or three….instead..Screen tenants extensively before you choose. Don’t pick friends of relatives or relatives as tenants….Stay frugal..put bigger $ on properties instead of instant bling. Learn how to renovate diy as well .