Real Estate Investing Basics

10 Ridiculously Easy Actions to Take Today if You’re Serious About Purchasing Your First Property

Expertise: Real Estate News & Commentary, Real Estate Investing Basics, Mortgages & Creative Financing, Personal Finance, Personal Development
72 Articles Written

Are you serious about purchasing your first property?

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Do you have the ability to make an offer on at least one property in your area of interest right now?

If you are currently incapable of making an offer on a property in the area that you are trying to invest in, there's nothing wrong with that. There are many reasons why you might not be able to — lack of funds, credit, or commitment. I'd encourage you to keep reading and learning about real estate here on BiggerPockets and take the plunge when you are ready.

On the other hand, I sometimes run across folks that claim to be ready to buy real estate, yet do not have the basic capability of legitimately offering on property.  I have to disagree with their belief that they are ready – they aren’t.

But I have some good news for you: It’s really easy to be taken seriously as a buyer.

It may not be really easy to find a great deal, to do all the proper due diligence on a property, or to get your offer accepted, but it's really easy to put yourself in position to make a legitimate offer on property right now.

All you have to do is demonstrate that you are capable of purchasing the property to three parties:

  • Yourself
  • The Seller
  • The Lender

Below, I’ll list the ten ridiculously easy steps you can take to demonstrate that you are serious about buying real estate, and put yourself in position to make an offer on a property tomorrow, assuming there’s a good deal available. If you are unable to complete any of these steps, then it may be a good idea to question whether you are fully ready to purchase real estate worth tens of thousands or hundreds of thousands of dollars.

10 Actions to Take Today if You’re Serious About Purchasing Your First Property

1) Gather all your financial information in one place.

If you don’t know how much money you are making, spending, and investing right now, how can you possibly be considering buying real estate, a business where people lose money all the time?

Once upon a time, organizing your finances was a challenge and took a dedicated effort.  Luckily, we now live in 2015, and compiling and tracking your finances is easy to the point of silliness.

Related: An FHA-Financed Duplex is an Ideal First Investment Property: Here’s Why

There are a whole bunch of financial software systems that make this ridiculously easy. You only need one, though, and I personally use Do yourself a favor and spend one hour or so connecting the following things to Mint’s (super easy to use) system:

  • Bank accounts
  • Investment/retirement accounts
  • Property (house, car, other large assets — it will suggest how to find market value)
  • Credit cards, loans, and other debts
  • Anything else that impacts your net worth

2) Examine your expenses.

Now that you’ve hooked up your bank account and credit card to Mint, spend just one hour categorizing each of your expenses in the last month. Take action based on the results.

I personally do this each and every month, and after the initial setup, it takes me just 10 minutes to examine my spending. Be honest with yourself about which expenses were unnecessary, and make sure you don’t get hosed by your bank, credit card company, or with any other unusual expenses (though once again, as a Mint fanboy, I have to give them credit — they usually email me right away when any of those things come up).

If your life is currently cashflow negative, you might want to re-examine whether you are ready to buy property. You are about to play a high stakes financial game, and if you are unable to control spending in your day to day life, that is an indication that you are not ready to purchase real estate. I’d rectify your personal finances first, then move forward with your real estate goals.

3) Decide where you want to buy.

It’s my opinion that you aren’t serious about purchasing property if you don’t have a region, city, or neighborhood that you are committed to focusing on.

You are going to work with professionals that are local, banks that are local, contractors that are local, and anyone and everyone else related to the property will be local. If you aren’t sure where you want to buy, you aren’t ready to buy.

4) Check your credit score.

Another layup. You had better believe that anyone getting ready to lend you money to buy a property worth hundreds of thousands of dollars is going to check your credit score, and not knowing this critical piece of information is a huge disadvantage to getting started.

Once again, there are a ton of options out there for doing this. And once again, I’m going to give you a simple and obvious solution — just go ahead and use Credit Karma. I use it, it’s free, and it’s simple. Takes 10 minutes.

5) Demonstrate a history of standard life payments

This is one that’s a little more subtle than the first four, but not being able to demonstrate a history of payments that the vast majority of Americans are making each and every month can actually delay you significantly.

When you ask a bank for a loan, especially if you are a first time buyer applying for FHA financing, the lender will want to see the following:

  • Your credit score
  • Your income
  • A track record of consistent and significant payments

Here are some examples of payments that you’ll want to have made (consistently) for at least a year if you are looking to get financing for your first property:

  • Credit card payments
  • Rent or mortgage payments
  • At least one instance of a utility bill like electric/water/internet

It’s really easy to check and make sure that you are paying these consistently, but it’s also easy for a lot of folks to informally pay roommates/parents/loved ones for these types of services. Make sure that your name is on any credit card, lease/mortgage, and utilities that you pay. It’s important to demonstrate that track record to your lender.

6) Gather important legal and tax documents.

Here’s a list of documents you’ll almost certainly need in the process of applying for financing. Make them easily accessible if you are considering financing a property:

  • A few recent paystubs
  • Two years of tax returns
  • Contact information for your current landlord or information about your current mortgage
  • Recent utility bill
  • Recent statements for all bank accounts, credit card, investment accounts, and retirement accounts
  • Government ID

7) Contact a local agent.

There are a million different ways to get started investing in real estate, but if you ask me, I'd suggest just getting yourself an agent. If your experience is at all similar to mine, you are going to overanalyze every step of the process, and having an experienced professional to go to with questions is a HUGE benefit.

Here are three reasons why I’d recommend that anyone looking to buy a property for the first time go through an agent:

a) Experience

Unlike me, my agent had been through the purchase of a property in my market before. She was there to answer every question I had, remind me of deadlines, and pointed out problems to watch out for.

b) Incentives

My agent got her commission when I closed on my duplex. That commission was a powerful incentive to ensure that I hit every deadline and to quickly respond to any and all questions I had about inspections, legal documents, financing, etc. It’s possible that attempting to get my own license and study the market solo would have delayed my entry into real estate 6 months or more.  Assuming that working with an agent got me into my property that much sooner, her commission was easily worth it.

c) Connections

There are quite a few people that you will need to work with on any property. You can either vet each and every one individually, or you can vet your agent and trust their judgement. My agent connected me with an inspector and a lender, both of whom I ended up working with.

Here are three very easy ways to connect with an agent:

  1. Post to the BiggerPockets Forums and ask if anyone can recommend a reputable agent in your town.
  2. Similarly, you can meet BiggerPockets Members in your area and ask for a referral.
  3. Outside of BiggerPockets, you can find agents anywhere and everywhere — I’d look on Zillow, Trulia, or start with a good, old fashioned Google search. Just make sure that you work with an agent that understands your unique situation.

8) Contact a local bank and get a pre-qualification letter.

In order to seriously offer on any property, you’ll likely need a pre-qualification letter from a lender.  This document is an informal letter stating that the local bank believes that you are likely to qualify for a mortgage. Making an offer with one of these makes it more likely for the seller to take you seriously.

Much of the time, these pre-qualification letters can be obtained with a simple phone call. In my case, my lender asked me how much income I earn, what large debts I had, what assets I had, how much I could afford to put towards the downpayment, and what my credit score was.

Because you’ve already taken care of the easy steps prior to this, you should have absolutely no problem giving your potential lender this information and obtaining a pre-qualification lender.

There are many ways to find a lender. Three really easy ones that I recommend are:

  1. Ask your agent for a trusted lender
  2. Ask for referrals on BiggerPockets
  3. Google “home loans [your city]” and shop around

Keep in mind that some BiggerPockets users will suggest that you get a “pre-approval” letter instead of a pre-qualification letter. The difference between the two is simple: A pre-qualificaiton letter is informal and is the bank’s way of saying that you are likely to get approved for a loan, while a pre-approval is a formal means of demonstrating that you are already approved.

Related: An Easy, Slow, Low-Risk, & High-Reward Way to Buy Your First Investment Property

While getting a pre-approval letter may not be a bad idea, I personally was able to purchase my property just fine with a simple pre-qualification letter, and I went through the approval process afterwards. I chose not to get a pre-approval letter because I wasn't sure if my offer on the property was going to be accepted, and I didn't want to have to go through the intensive formal approval process until I knew that I was under contract.

9) Set aside cash for your earnest money and downpayment.

If you are serious about buying a property, you will have access to cash. Most first time purchasers will likely need to bring cash to the table just to make an offer on the property. This cash is called "earnest money," which is basically like a security deposit when you offer on a property.

Most first time purchasers will put down earnest money, and get a mortgage formally approved by the bank AFTER the offer is made (like I did).

In my case, I offered to buy my duplex for $240,000, and the seller required that I deposit $5,000 earnest money into a holding account managed by a third party to demonstrate my seriousness. If I had decided to back out of the deal for a bad reason, I risked losing $5,000.

You can be sure that I was extremely interested in the property, and believed strongly that I was able to purchase it with $5,000 cash on the line.

After I got the property under contract, I applied for, and was approved for, my mortgage, and my earnest money was used as part of my downpayment.

Setting aside this cash is very easy, assuming that you have saved up for this purpose. Just move it into a separate savings account. Generally, earnest money will be around 2.5% of the purchase price of the property, so plan accordingly by looking at recent sales prices for properties in your area of interest.

10) Set up automatic alerts for MLS Properties in your area.

I would not call myself serious about purchasing real estate if I was unaware of the properties that are publicly available for sale in my area of interest.

The super-simple way to do this is to do this, and the method I use, is to simply ask your agent to send you every property that hits the MLS in your area, and that meet the criteria for properties you're interested in. Most agents will do this for free – just send him/her an email outlining the types of properties and locations that you are interested in.


These steps are the absolute bare minimum if you are seriously considering buying property. If you aren’t ready to take the easy actions above, then you aren’t even in position to offer on property.

Do yourself a favor, and take these simple actions to put yourself in position to purchase property – if you are seriously interested in real estate.

No one will sell to you if you don’t.

For those with some experience under your belt, what would you add to my list? For all the newbies out there, what questions do you have about this process?

Let’s talk in the comments section below!

Scott Trench is a perpetual student of personal finance, real estate investing, sales, business, and personal development. He is CEO of, a real estate investor, and author of the ...
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    Joe Sillaman from Ewa Beach, HI
    Replied over 5 years ago
    Correction, get Pre-Approval. Pre-Qual is just a conversation. At least for hot real estate markets. Great article!
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 5 years ago
    Joe – I agree that getting a pre-approval can be helpful, and mentioned that in the article. I think that a lot of first-time buyers may not be ready for the pre-approval process simply because for most folks, a first home purchase will be the largest financial decision of their lives to that point. Getting all the easy ducks in a row (pre-qaul instead of pre-approval) is REALLY easy. Getting the Pre-approval is not quite as easy and is a little more time intensive.
    Jeremy Magin Investor from Seattle Area, Washington
    Replied over 5 years ago
    I’m a bit skeptical of linking all of my financials to an online or cloud based service, just not convinced they are secure enough yet. Can you recommend software that stores the information on my machine? Great topic!
    Gina McKee Real Estate Agent from Mead, Colorado
    Replied over 5 years ago
    I use moneymanagerEX. Its free and is on your personal computer. I manually transfer my transactions onto it but I think you can link your accounts too.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 5 years ago
    Thanks for this suggestion Gina!
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 5 years ago
    Jeremy, I’m not worried at all about the security of my information through It’s owned by Intuit, a nationally recognized and trusted brand. I’m sure that there are many applications that can store your information locally – I don’t have any experience with these products, but I know that Intuit has a few Quicken Products that might be helpful. I’ve got no agenda with Intuit (I know I recommended two of their products here), I just feel like I trust a larger brand like that more than someone I’ve never heard of. Hope that helps!
    Theresa N.
    Replied over 5 years ago
    I agree – I’ve used for years and it’s a great site. It’s also nice because it’s all of your info is in one place – with serious encryption. Most people don’t have a clue as to what their net worth is so just the process of gathering all of the information is really helpful for many. Great tip.
    Gary Hammond Rental Property Investor from Las Vegas, NV
    Replied over 5 years ago
    Very good article, and while traditional financing is all well and good I would’ve like to have seen added information on private money and hard money lender funding as a source to buying real estate.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 5 years ago
    Gary – I appreciate the feedback here. I didn’t include private money or hard money lender financing because I personally feel that these are not the best sources of financing for FIRST time buyers. For most, a first home purchase is going to be a primary residence (like my duplex is for me). For others, using hard money loans or private financing for a first real estate venture is likely unrealistic (its much harder for first time buyers to attract private loans with no track record) or unwise – I know that I would have extreme reservations about taking private financing and risking friends/others money on a venture that I have no experience in, having never even bought a property with my own money before.
    Glenda Fenwick
    Replied over 5 years ago
    I too would prefer to use other peoples money. I have done some research on this and the funds range anywhere from 10-12%. Can you provide a little more information/
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 5 years ago
    Glenda – there are many ways to use other people’s money to invest in real estate. This was intended for the vast majority of first time purchasers, who will likely not use creative finance to purchase their first property. The great thing about a first property purchase is that if you are an owner-occupier, you can put down just 3.5% of the purchase price! When I learned that, I was super excited and used it as soon as possible. My feeling was this – How much more of Other People’s Money could I possibly want?!
    margaret smith
    Replied over 5 years ago
    As a hard money lender, I deal with all the good people who won’t qualify for all of this. Yes, these 10 items are simple steps- but often impossible to comply with for first time buyers. If you can get a bank loan, that is the way to go, as the rates are so low. However, if not- don’t give up. Use this article as a guideline to gather what you can- and then approach the private lenders you have access to for their feedback. The private lender will want to see your figures on why this is a good deal, in as much detail as you can possibly muster. In general– The banks are all about you– whereas the private money is all about the deal and the collateral itself. Very different types of criteria! PS- When working up your figures on the deal, don’t forget to add the “cost of money” in there!
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 5 years ago
    Margaret – thanks for this feedback. I agree with all your points and think that you offer some very constructive solutions for folks without access to conventional financing. One thing though – I wonder for whom some of these steps are impossible to comply with? I believe that these ten steps are pretty straightforward for most employed folks out there looking to invest in a first property. The only thing I can think of is this – if you are broke and bleeding money then you won’t have cash for earnest money – but if your finances are that bad, then are you likely to be in good position to wisely spend other’s money? I certainly wouldn’t lend to that person – especially not on their first ever real estate purchase. It’s my view that these steps apply to the vast majority of first time investors that are at all serious about building long-term wealth through real estate.
    Walker Hinshaw from Denver, Colorado
    Replied over 5 years ago
    Hi Scott, great article. I think the true newbie’s don’t get enough content targeted at them on this site so what you are doing is pretty great. As someone who was recently involved in his first deal, I know how easy it is to get lost in all the information on Bigger Pockets and feel like the first steps are way harder than they actually are. From now on, whenever I see a new investor who looks like a deer in the headlights, I will be directing them your way.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 5 years ago
    Thanks Walker!
    Gianni Laverde Investor from Corona, NY
    Replied over 5 years ago
    Thanks for the excellent advice Scott. You always provide great actionable content. I’m myself still in the process to figure out the best area, location to invest but moving towards that first investment.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 5 years ago
    Appreciate the kind words Gianni! I hope that this helps you take a few more small steps towards that first investment.
    Gianni Laverde Investor from Corona, NY
    Replied over 5 years ago
    One question: are FHA loans only applicable to owner occupied properties? I’m looking into buying a duplex, triplex or fourplex out of my home area due to the cost of properties in my area. Thanks
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 5 years ago
    Yes – you must live in the property for at least one year in most cases with an FHA loan. That should probably be your plan if you intend to use this type of financing.
    Nicole F. Renter from Philadelphia, Pennsylvania
    Replied over 5 years ago
    Hello all, I live in philadelphia, pa and I haven’t done any deals yet. I’ve been on bigger pockets for over a month now only listening to podcasts and just started reading the forums. I think those steps are great but Ive heard that you shouldn’t buy property in your own name. My question is, if you’re a first time homebuyer doesn’t your first home (owner-occupied) have to be in your personal name?
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 5 years ago
    In my case, it would have been exceptionally difficult to get an FHA loan for a property and then move it into an LLC. That said, you are right, in an ideal world, an investment property wouldn’t be under your own name. For me, the LLC was an excuse. It let me put off investing for a few months while I thought about it. I said screw it, I can either pay rent for two more years while I save up enough to buy a property with every i dotted and t crossed, or I can take action today, be imperfect, take some risk, and get moving.
    David Guderjahn Truck Driver from Phoenix, Arizona
    Replied about 5 years ago
    Hello. I live in Phoenix. Can you tell me about Fannie Mae loans as I am not going to occupy my first investment.
    Huiping Sheng Homeowner from Tampa, FL
    Replied about 4 years ago
    You demonstrated all so SIMPLE and clear. Science is to make things simple. BY far, I have 4 managers. One thing is common: the manager can explain the problem to me simple proved she/he knows the problem inside out, otherwise she/he has limited knowledge.