It’s been about seven months since I bought my primary residence. Luckily, I had done some research going in to the deal so I had at least some idea of what to do. But of course, you won’t really know or learn everything until you do it which is why taking action is so important. Below are some of the things I learned when purchasing the home in the order in which I did them. This all seems pretty cool now that going forward, I know what to expect and can approach deals with more confidence. Feel free to let me know if anyone has approached buying their house in a different way since I’m always looking to learn.

1. 1. Determine your type of property.

The first thing I did was figure out what type of property I wanted to live in. People sometimes want a little starter home with 3 beds and 2 baths that they plan to live in for 3-5 years before they upgrade to their forever home. I on the other hand, after listening to podcasts and wanting to become a real estate investor, wanted to house hack. I knew I wanted a 2-3-unit property that was more turnkey where a majority of the monthly payments were covered. I wanted to live in a decent area that was affordable, good rents, and close to transit. I planned to live in the property for 1-2 years and then move out and have both units rented and cashflow.

1. 2. Find a Realtor

I knew that since I was going the investor route, I would need an agent who understood and owned rental property. I found one that owns 40+ units that invested in the same areas I had interest. This helped make the dialogue much easier and when I wasn’t sure about something, they could provide input based on experience and knowledge. If I wanted a 4 bed, 2.5 bath forever home, I may have gone with a different agent. Since they were experienced, they were able to recommend a good mortgage broker, home inspector, and attorney.

1. 3. Get preapproved

Getting preapproved is something you want prior to viewing properties. I learned you can get preapproved from a bank on your own or go through a mortgage broker. I selected a broker recommended by my realtor because I’d rather hire the professional and see how they conduct that portion of the deal and learn the process from them. Getting preapproved is free, it only costs you a little time pulling some personal information together. I found this to be a good thing because it forced me to consolidate much of your important financial information. Getting preapproved told me what property value a bank will lend to me, not necessarily how much I can afford. Having a preapproval letter will put the seller at ease and help them choose your offer since they know the financing likely won’t fall through when the property is under contract.

1. 4. Find an Attorney

I knew from reading and listening to podcasts that I wanted an attorney who specialized in real estate. Having your friend or relative who is an attorney represent you is a recipe for disaster if they aren’t in the RE game. Again, my realtor recommended two or three attorneys and I selected one who was local, owned rental property, and had similar interests (likes hockey, golf, fishing, etc.). I learned having a solid attorney will ensure the contracts meet your wants and needs and everything you do in the deal is legal. The attorney should also provide or recommend title insurance to ensure you don’t buy a property where multiple people have a claim to ownership.

1. 5. Home Inspection

Assuming you found a property, placed an offer, and got it under contract, the next step is to set up the home inspection. My realtor was able to refer me an inspector who is very detailed, been doing inspections for 30+ years, and is willing to work around my schedule. I learned getting the inspection done as soon as possible is important so you can stay within your contingency period. I elected to go with the structural, wood destroying insects, and radon inspections. Once you get the inspection report you will have a better idea if there are major issues with the house. If there are potential issues, you’ll have time to call in an expert (i.e. electrician or roofer) to provide an estimate on repairs. If needed repairs are >$1,500 typically, then you can begin to negotiate on price, ask for a credit at closing, or ask the seller to adjudicate the problem prior to closing.

1. 6. Loan Commitment

I chose to go with an FHA, 3.5% down payment for my financing since it was my first property. In order to secure financing, the lender whom my broker found required an appraisal of the property to verify it was worth them lending on the property. I learned lenders typically require most of your personal and financial information to ensure you are a good risk for them and determine what interest rate to give you. I found out the better your credit, the better the interest rate you get. In my case, the only additional information the lender required was explanations for deposits of money in my checking account and a letter signed by my parents because they were listed on my bank accounts from when I was a kid. Once all the bank's questions were answered, they sent me a loan commitment letter basically saying they were willing to lend me the money at a 96.5% LTV at an interest rate that will be secured for a finite amount of time.

1. 7. Property Insurance

I didn’t want to call this home insurance because in my case I was buying a duplex so it was a different insurance since I would have tenants on the property. I went with the same insurance company I use for car insurance and past renter’s insurance. Another option would have been using an insurance agent to find a policy that was right for me but my insurance company has always given good rates and they had all my information on file. For investment properties, insurance agents are a good way to go since they can give you a policy that can protect you and your property with other people living on your property. I know once I move out of my duplex and rent out both units that I’ll need to let my insurance company know so they can change the policy to be purely a landlord policy.

1. 8. Final Walkthrough and Closing

Before I closed, I performed the final walkthrough of the property the morning of the closing. I brought with me the inspection report, a list of the items I asked to be fixed by the seller, and a notebook to take additional notes on the property. The realtor and myself walked the property and looked for a number of items. First and foremost, we verified the items I asked to be fixed actually got fixed – and luckily, they were. We also made sure the place was vacant and empty of personal items (they were other than some pots and pans). It was at this point it started to hit that I’m about to be a homeowner.

Once we were done with the walkthrough, I drove to my bank to withdraw the bank check for the closing. I showed up at the closing where I met with my mortgage broker, realtor, and attorney. The closing took about 45 minutes because I had my attorney and broker explain all the documents to me to make sure I understood what I was signing. Once the closing was complete, I obtained the keys from my realtor, went to Home Depot to buy materials for the house, and went to prep the other unit since I had rental showings the next day.

These were a high-level overview of the steps I took when buying my first house. Again, feel free to let me know if you did anything different when buying your house. I think it went pretty smoothly since I wasn’t in a rush to close and I had done my homework before buying so I understood the process for the most part. I took this process as a learning experience, and now that I have another property under contract, I’m moving forward more efficiently to get the deal done. This one is seller financing so there’s different challenges but that just adds another tool to my tool belt.