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.
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!
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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.
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?
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.
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!