Ultimate List of Questions for Newbie's Before Buying Property

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Ultimate List of Questions for Newbie's Before Buying Property

Katherine Lewis
San Francisco · Member since 2023 · 24 posts · 7 votes

Hey Community,

New investor here. I've seen such a wealth of insights being offered across the many posts I've consumed since starting this journey. It's been hard to keep up, so I'd love one resource. I want to compile the 'Ultimate List of Questions for Newbie's Before Buying Property' (and then share it widely here!). So, would love to have all of you answer:

What are the most important questions you should be asking yourself as a new investor when evaluating your (first) property?

Did you learn something the hard way? What is the question you wished you asked first? Did asking one particular question save you from making a huge mistake?

As an example, one question I really like is "Do you have a pivot or exit strategy if STR stops working in your market?" (e.g. move to MTR etc.)

READY SET, GO!

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Most Popular Reply

Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y

Here's mine - Am I in a strong enough financial position to afford this?

7Reply
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43 Replies

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    Here's mine - Am I in a strong enough financial position to afford this?

    7Reply
  • Katherine Lewis
    OP
    San Francisco · Member since 2023 · 24 posts · 7 votes
    2y
    Quote from @Nicholas L.:

    Here's mine - Am I in a strong enough financial position to afford this?


     Thanks for being the first to reply this post! Very solid point.

    0Reply
  • Berry StarnesPro Member
    Member since 2021 · 51 posts · 22 votes
    2y

    When using a 10% down Second home loan to purchase a STR, how long are you required to stay in it per year? What if your intentions don't pan out and you can't stay there for this long of time? Are you able to get multiple 10% down loans for second homes if you refinance out or if you already have 20% equity? What can you do besides get an appraisal if you believe you have 20% equity in order to drop PMI?

    0Reply
  • Katherine Lewis
    OP
    San Francisco · Member since 2023 · 24 posts · 7 votes
    2y
    Quote from @Berry Starnes:

    When using a 10% down Second home loan to purchase a STR, how long are you required to stay in it per year? What if your intentions don't pan out and you can't stay there for this long of time? Are you able to get multiple 10% down loans for second homes if you refinance out or if you already have 20% equity? What can you do besides get an appraisal if you believe you have 20% equity in order to drop PMI?

    Thanks, Berry, really appreciate the point about contingency planning.
    0Reply
  • Bonnie LowPro Member
    Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
    2y

    I think you need to start by asking what are your goals, what do you have to invest with and what is your risk tolerance? These are foundational questions everyone should ask themselves. Likely all of these will change over time, but what's the answer today because that's where you're starting from.

    [email protected]
    3Reply
  • Katherine Lewis
    OP
    San Francisco · Member since 2023 · 24 posts · 7 votes
    2y
    Quote from @Bonnie Low:

    I think you need to start by asking what are your goals, what do you have to invest with and what is your risk tolerance? These are foundational questions everyone should ask themselves. Likely all of these will change over time, but what's the answer today because that's where you're starting from.


     Great points. My partner and I started exactly there. On thing I'm curious about is how others define their risk tolerance... e.g. what strategies align with high, middle and low risk tolerance. I'd love to know if there are any great resources out there that dive into this!

    1Reply
  • Nathan M kiefer
    Rental Property Investor · south carolina and michigan · Member since 2023 · 348 posts · 226 votes
    2y

    The first test for us is will it pay us back in 5-10 years maximum. We don't leverage banks so we ask our self that first " as the bank"

    if it doesn't pass that as a ltr or are we don't buy it

    1Reply
  • Jeremy Jareckyj
    Real Estate Agent · Salt Lake City, UT · Member since 2020 · 490 posts · 205 votes
    2y

    I know a lot of STR investors who won't buy if the property doesn't make sense as a LTR.. but the one thing about that is that some of the more successful STR markets never will work at LTRs (Park City UT, Pigeon Forge TN etc) . There is much more to consider than it simply working as an LTR. I think the first comment from Nicholas L. is great. Does this payment make sense for my financial situation?

    In Salt Lake, I try to target certain homes that could potentially be broken up to create multiple rentable spaces in the future that way you can transition from STR if there is ever a bust. I am also a HUGE supporter of getting an STR in an area where you can get a license for it. I believe that over the course of the next few years the non licensed STRs will continue to be slowly removed.

    1Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Katherine Lewis

    just curious, are there particular areas you're interested in?

    0Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    2y

    Not as much a question as it is a general piece of advice - don't act like you know things that you think you are supposed to know. You'll find that you will get much better experience if you go to a lender, for example, and just say, "My name is Travis, and I'm a moron...can you help?" rather than acting like you know what you are talking about. The same goes for other RE related vendors. Find someone who you trust, show your cards, and just ask questions without the fear of looking stupid. 

    4Reply
  • Ron Hollingsworth
    Investor · Phoenix, AZ · Member since 2017 · 108 posts · 30 votes
    2y

    am I capable of removing emotion from my decision making process and work strictly from the numbers?

    2Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes
    2y

    I think in 2024 the question is "Why am I getting into this business". The clients we lost in 2023 due to the more competitive market were in it as a sort of get rich quick scheme and generally lacked the real estate background to reinforce the ebbs and flows of the market. They also wanted to pinch every penny in regards to amenities and maintenance and ended up with a mostly undesirable property especially when compared to competition. In 2024 we are seeing a strong rebound as the market purged the excess supply (at least in our primary market - Tampa) and purged a lot of investors who likely should have never been in the market. Lucky for them they exited with good equity. The new breed of investor we are seeing are looking at STR's as an alternative to LTR where the return is slightly better and they are owning a higher class asset that will appreciate better in years to come. The other investor we still see is a second home person who is hoping to generally break even and have a second in FL, which is still very viable. I think if you want to get into this business for the right reasons and the right expectations (and do the right things) you will generally find success. If you are looking to quit your day job or retire on the income of 1-2 properties, you will fail.

    [email protected]813-563-0877
    Vacation Rentals of Florida53 Reviews
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    1Reply
  • Drew Smith
    Realtor · Tyler, TX · Member since 2023 · 16 posts · 12 votes
    2y

    The biggest question for me was: What property type will get me started?

    Now I primarily invest in STR. But I got started with a long-term that cost 70k and was about 30 minutes from where I live. That's where my comfort level was in the beginning.

    1Reply
  • Bradley BuxtonBusiness Member
    Real Estate Agent · NV · Member since 2023 · 1k+ posts · 720 votes
    2y

    @Katherine Lewis

    What is my exit plan? 

    What is my timeline for exit? 

    How much new building is happening in the area that might reduce my rents or create competition on my exit sale? 

    What types of jobs are moving into the area?  Are they above or below the median wage for the area? 

    1Reply
  • Bonnie LowPro Member
    Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
    2y
    Quote from @Katherine Lewis:
    Quote from @Bonnie Low:

    I think you need to start by asking what are your goals, what do you have to invest with and what is your risk tolerance? These are foundational questions everyone should ask themselves. Likely all of these will change over time, but what's the answer today because that's where you're starting from.


     Great points. My partner and I started exactly there. On thing I'm curious about is how others define their risk tolerance... e.g. what strategies align with high, middle and low risk tolerance. I'd love to know if there are any great resources out there that dive into this!


     When I think of risk tolerance, I think about what my miniminum criteria is and what my fall back plan is. How much do I need to make on this deal? How am I going to afford it if I don't get that? What are my opportunities to pivot if it doesn't work out as planned. What is my exit strategy? That's what I mean by risk tolerance.

    [email protected]
    1Reply
  • Katherine Lewis
    OP
    San Francisco · Member since 2023 · 24 posts · 7 votes
    2y
    Quote from @Bonnie Low:
    Quote from @Katherine Lewis:
    Quote from @Bonnie Low:

    I think you need to start by asking what are your goals, what do you have to invest with and what is your risk tolerance? These are foundational questions everyone should ask themselves. Likely all of these will change over time, but what's the answer today because that's where you're starting from.


     Great points. My partner and I started exactly there. On thing I'm curious about is how others define their risk tolerance... e.g. what strategies align with high, middle and low risk tolerance. I'd love to know if there are any great resources out there that dive into this!


     When I think of risk tolerance, I think about what my miniminum criteria is and what my fall back plan is. How much do I need to make on this deal? How am I going to afford it if I don't get that? What are my opportunities to pivot if it doesn't work out as planned. What is my exit strategy? That's what I mean by risk tolerance.

    Ah, yes, thanks for the clarification! Makes sense. 
    0Reply
  • Katherine Lewis
    OP
    San Francisco · Member since 2023 · 24 posts · 7 votes
    2y
    Quote from @Nathan M kiefer:

    The first test for us is will it pay us back in 5-10 years maximum. We don't leverage banks so we ask our self that first " as the bank"

    if it doesn't pass that as a ltr or are we don't buy it

    Makes sense, Nathan. Fantastic that you don’t use banks!  
    1Reply
  • Alan F.
    Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
    2y
    Quote from @Katherine Lewis:

    Hey Community,

    New investor here. I've seen such a wealth of insights being offered across the many posts I've consumed since starting this journey. It's been hard to keep up, so I'd love one resource. I want to compile the 'Ultimate List of Questions for Newbie's Before Buying Property' (and then share it widely here!). So, would love to have all of you answer:

    What are the most important questions you should be asking yourself as a new investor when evaluating your (first) property?

    Did you learn something the hard way? What is the question you wished you asked first? Did asking one particular question save you from making a huge mistake?

    As an example, one question I really like is "Do you have a pivot or exit strategy if STR stops working in your market?" (e.g. move to MTR etc.)

    READY SET, GO!


     I may be taking the question out of context but to me it seems questions would be;

    Is the market truly viable to my goal? Do I really know the comps? Do I really know the ARV? Is the title clear? Is my inspection actually accurate?

    And a multitude of others tha I hope others will share.

    Then compile everything;

    Strategy, Deal, DD etc. If you make one share it with me ;)

    0Reply
  • Katherine Lewis
    OP
    San Francisco · Member since 2023 · 24 posts · 7 votes
    2y
    Quote from @Bradley Buxton:

    @Katherine Lewis

    What is my exit plan? 

    What is my timeline for exit? 

    How much new building is happening in the area that might reduce my rents or create competition on my exit sale? 

    What types of jobs are moving into the area?  Are they above or below the median wage for the area? 


     Thanks, Bradley, these are great ones to add to the list.

    0Reply
  • Katherine Lewis
    OP
    San Francisco · Member since 2023 · 24 posts · 7 votes
    2y
    Quote from @Jeremy Jareckyj:

    I know a lot of STR investors who won't buy if the property doesn't make sense as a LTR.. but the one thing about that is that some of the more successful STR markets never will work at LTRs (Park City UT, Pigeon Forge TN etc) . There is much more to consider than it simply working as an LTR. I think the first comment from Nicholas L. is great. Does this payment make sense for my financial situation?

    In Salt Lake, I try to target certain homes that could potentially be broken up to create multiple rentable spaces in the future that way you can transition from STR if there is ever a bust. I am also a HUGE supporter of getting an STR in an area where you can get a license for it. I believe that over the course of the next few years the non licensed STRs will continue to be slowly removed.


     Thanks, Jeremy, I'm totally with you on the license/permit. I'm focused on markets where the regulation is clear.

    0Reply
  • Katherine Lewis
    OP
    San Francisco · Member since 2023 · 24 posts · 7 votes
    2y
    Quote from @Alan F.:
    Quote from @Katherine Lewis:

    Hey Community,

    New investor here. I've seen such a wealth of insights being offered across the many posts I've consumed since starting this journey. It's been hard to keep up, so I'd love one resource. I want to compile the 'Ultimate List of Questions for Newbie's Before Buying Property' (and then share it widely here!). So, would love to have all of you answer:

    What are the most important questions you should be asking yourself as a new investor when evaluating your (first) property?

    Did you learn something the hard way? What is the question you wished you asked first? Did asking one particular question save you from making a huge mistake?

    As an example, one question I really like is "Do you have a pivot or exit strategy if STR stops working in your market?" (e.g. move to MTR etc.)

    READY SET, GO!


     I may be taking the question out of context but to me it seems questions would be;

    Is the market truly viable to my goal? Do I really know the comps? Do I really know the ARV? Is the title clear? Is my inspection actually accurate?

    And a multitude of others tha I hope others will share.

    Then compile everything;

    Strategy, Deal, DD etc. If you make one share it with me ;)


     Hey Alan, definitely foundational questions. I'll make sure to share the list!

    1Reply
  • Hannah Roach
    Real Estate Agent · Fayetteville, NC · Member since 2023 · 24 posts · 28 votes
    2y

    A great question to ask yourself is what kind of property you are looking for, what area do you want it to be in, and how much rehab you want to put into it. Some properties are going to need to more work than others and having a game plan and amount your willing to spend on the rehab is something you should figure out before purchasing a property.

    0Reply
  • Katherine Lewis
    OP
    San Francisco · Member since 2023 · 24 posts · 7 votes
    2y
    Quote from @Nicholas L.:

    @Katherine Lewis

    just curious, are there particular areas you're interested in?


    Hey Nicholas, good question. If you mean geographic areas, then it's not clear yet. Mainly thinking of the more unsexy, but reliable markets, and stayiing away from the ones that most STR convos focus on.

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Katherine Lewis

    yes, that is what i meant. i have a few markets i'm keeping an eye on for STR but haven't pulled the trigger yet. my portfolio so far is just LTR.

    0Reply
  • Katherine Lewis
    OP
    San Francisco · Member since 2023 · 24 posts · 7 votes
    2y
    Quote from @Nicholas L.:

    @Katherine Lewis

    yes, that is what i meant. i have a few markets i'm keeping an eye on for STR but haven't pulled the trigger yet. my portfolio so far is just LTR.

    Gotcha. So, I've been doing a ton of research and my gut says stay away from the markets where everyone's attention is. I don't want to end up having to compete at high price points / OpEx just to stand out in an increasingly saturated market. Not at this early stage when my liquidity / cash flow / leverage is low compared to my competitors. I also am not going to consider markets where zero STR regulation is in place. I want to buy and hold in a market with higher than average appreciation, and I don't want to worry about regulations coming in and making STR impossible/too difficult. Also, regulation limits supply (sometimes this a huge advantage if you know your competition is significantly capped). Perhaps these are thing you've already been thinking of, but sharing my POV in case helpful. So all that to say that I am not clear on which place to focus on but getting closer! I really appreciated the new 2024 report from STR Insights. The list provides names of places I've never heard of, which means others probably haven't either :)

    What’s been holding you back from pulling the trigger @Nicholas L.?

    1Reply
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