I am looking at investing in rentals but of course am scared! :) I am not sure if I should go to a lender first or if I should find the property first. My husband and I won't have a lot of money for down payment. We are thinking about starting with a condo to get our feet wet and not to buy anything big. We would like to be wise in our strategy. What should be our first step? Condo or lender? Plus, are mobile homes a bad idea in Maricopa County? There seem to be a lot of mobile home parks that are being used and these homes are super cheap. Any thoughts?
I would find a mortgage broker that deals with investors, many of the 'regular" mortgage brokers just don't have the experience in dealing with multiple properties (which is why some will tell you that you can only have 4 conforming mortgages when you can actually have 10). You don't need them to pull your credit at this time, you can pull it at myfico.com and it won't count as a hard inquiry.
Also find a real estate investors club in your area, you need to be learning at this point.
I don't deal in condos because in my area they are way too hard to sell, other areas are different, which is why you need to learn from someone in your area
Good Luck! It's a great path to start down.
Hi Anna, personally I would go to a lender first, see how much funds are available then start looking. Often, if the deal is good, you will need to act fast because there are other investors out there. And if there aren't, I would be very very careful with due diligence. If no one else wants it, there is probably a reason.
Waffling around trying to get funding at that point would almost always means the seller moves on to another buyer. Unless the market is absolute crap..which at that point, you need to ask yourself if it is a good idea to invest in a crap market it might be, it might not be.
Like @Andy Collins , I personally wouldn't do condos as a long term rental unless i am buying the entire building. There can be legal issues pertaining to the HOA, corruption in the property management, too many outstanding liens etc which limits your ability to liquidate your investment.
Not to say condos couldn't do well as a rental (in fact i do have one condo as a rental), but from past experience, I think there are simpler properties to start with, like a mid size single family home in Mesa (preferably in a nice neighborhood without HOAs), where you can learn the ropes, not have to worry about getting your neighbors co-operation should any issues come up with the property and easy to liquidate if you find land lording is not for you after all.
Also, single family homes tend to have better capital appreciation and if you want financial freedom as you had mentioned in another post, I think capital appreciation is important.
You want to go to a lender first and get pre-approved for a mortgage. Others are right. You want to work with someone who has experience in working with investors. The pre-approval will let you know how much you can buy.
Get pre-approved before you start hunting for your first investment. The disappointment when you find the perfect property only to find out you can't get funding stings pretty bad (ask me how I know). Of course you could always forego traditional funding and seek other creative finance options but that's a whole different conversation. If you & your hubby are dead set on a condo then by all means go for it but as someone mentioned above, be prepared to deal with the HOA. A lot of what I have read on this site and others suggests a single family home as a first investment but only you know what's best for your situation. Be sure to let us know what you decide and keep us updated on your progress into REI.
Thank you everyone for your responses and advice! Looks like my husband and I will be going into single family homes. We discussed it after much of the research, especially from BP, and our first new team member(yay!) that condos are not for us and we really want to build a portfolio through sfhs. That being said, our next step is going to be getting pre-approval!
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