Wouldn’t it be blissful to buy a property, use your handy skills to fix it up, refurbish it, make it enticing, and then flip that house for a large profit? Yes, it would be blissful, but it wouldn’t be realistic. Investing in real estate properties can be a tricky business with a pipeline of multiple risky investments working simultaneously, not just one house at a time. It takes more than one or two people with maintenance or design skills to pull off successful real estate investments. Before you dip your tenderfoot toes into the real estate investment pool, there are some things you should carefully consider.

Don’t go it alone. To be profitable in your real estate investments, you need an entire team on your side. You’ll need a real estate agent, a home inspector, an appraiser, a closing attorney, and lender to assist with your own property investments as well as helping potential buyers. You may also need contractors for home repairs. If your plan is to hold properties for rent, you may also need a property management company. Working with a management company or property manager is another complex layer to property investments, and could prove costly. Research various property managers to determine if they may help or hurt your bottom line.

You cannot dip into your family’s retirement savings, buy a property you think is priced low, and then do it yourself in a flip. Many successful investors warn against single transactions. If you’re buying one home at a time to fix up and sell, you’re doing a transaction, not operating a business. Have you ever frequented a restaurant that has only one item on the menu? Doctors have more than one patient. A mechanic repairs multiple cars. Working one house at a time makes for a risky hobby, not a business structure.

It’s unrealistic for you to think you’ll get rich quick by making real estate investments. Many people are intrigued with the television programing showing successful couples buying, fixing, and flipping houses. It is tempting to think that if the people on television can make a living flipping houses, then so could you. But what you don’t see is the behind the scenes garnering of education, experience, and wisdom to navigate the industry with minimal risk. You shouldn’t believe everything you see on television. You need a solid business plan before you make your first purchase. Additionally, you need the understanding that real estate transactions aren’t about the properties, but about the numbers. To be profitable in investing, you should have multiple properties in various stages of purchase, repairs, rentals, and sales. You cannot stumble into success by planning as you go, or fly by the seat of your pants one project at a time and expect to be successful.

Any property you purchase is going to come with risk. Although the price might seem perfect for the plucking, there may be ugly truths behind the home’s exterior. If you’ve blown your entire savings in the purchase of the property, you won’t have any funds left for the fix it projects or expensive repairs necessary before the house can be put on the market. It’s not as easy as buying a house, holding on to it until the value increases, and then selling it quick for a big buck. Many investors find themselves floating in failure, up to their eyeballs in expensive projects because they paid too much for a property and didn’t have a proper plan in place for repairing and selling the house.

Before you make your first step into the realm of real estate property investments, do your research. As with any business undertaking, you must understand the market and its demands. Educate yourself about real estate investing. Read articles, buy books, and investigate the Real Estate Investors Association. Buying your first property without proper knowledge of the industry is jumping into the pool without any water. You can prevent setting yourself up for failure with a bit of patience, prudence, and proper respect for the industry into which you’re trying to succeed.

For more information on investing in real estate in DeSoto County, give Mark a call at 901-239-6041.

Buying your first home is a remarkable achievement and a monumental milestone. Before you jump the gun and sign on the dotted line, there are some things about first time home buying that you should take into consideration.

Clean Up Your Credit

Your credit should be in great shape before attempting to borrow substantial funds for a home loan. If there’s anything derogatory appearing on your credit reports, get those tidied up and taken care of before you begin the home buying process. Cleaning up your credit if you have a negative history could be a time consuming and frustrating process, so take care of that before you even begin looking for your new home.

Get Pre-Approved

With a clean credit history and a healthy deposit, you’re ready to seek out pre-approval for your home mortgage loan. Being pre-approved for your home loan is imperative for two reasons. First, by being pre-approved, you’ll know what your budget is for purchasing a house. Second, when you do locate your dream house, you won’t risk losing it to another potential buyer in the time it takes to apply for a home loan. Your home loan may be fixed-rate, meaning the interest and payments don’t change over time, or may be variable-rate, meaning the introductory fees are small, but interest may inflate over time. The life of your home loan may be a ten year, fifteen years, or thirty-year loan, or longer, which will alter your monthly payment amount.

Be Prepared for Additional Expenses

Be prepared with funds on hand for your deposits and closing costs as these items are not covered by your home mortgage loan. Your deposits and closing costs are separate and apart from your down payment.

Call Mark and Debra

You’ll want to find a real estate agent that has strong negotiation skills and knows the current real estate market. Mark and Debra will communicate clearly and efficiently regarding the purchase and processes of closing on your first home. Having their knowledge and experience working on your behalf will lessen your stress. You can reach them at 901-239-6041.

Be Prepared for Competition

Be prepared for multiple offers to come in on the house you select. When you fall head-over-heels in love with a particular house, chances are, so might someone else. You may not be the only person placing a bid on your dream home, so don’t be caught off-guard if your realtor tells you there’s competition. When multiple offers come in on a single property, you’ve got to either up the ante on your bid, adjust your terms, or be prepared to walk away and find another house. Mark and Debra will assist you in navigating through multiple-offer scenarios.

Know the Process

When the buyer accepts your offer, you’ll be asked to make a good-faith deposit. You’ll pay this non-refundable deposit to the broker or attorney, and not directly to the seller. The home is then appraised by a specialized appraiser to ensure the bank lending the home loan that its value matches the asking price.

Once your offer is accepted, a home inspector is called in to look over the entire structure. During this phase, it’s possible the home inspection process will disclose unpleasant news, such as a roof in disrepair, or plumbing that’s not up to code. Don’t be alarmed if the home inspection doesn’t produce perfection. Know that when the home inspection discloses things that are in disarray, the contract is re-negotiated to include repairs or an allowance for repairs, so the home is in good order when you move in. At this phase, you also have the opportunity to back out of your contract if the repairs needed are more than you’re prepared to deal with comfortably.

The seller of the property you’ve chosen to buy may have a home warranty in place to protect themselves and your interests in the sale of the house. A home warranty is purchased separately from a home warranty company and includes repairs to the home at reduced rates by qualified pre-selected contractors.

Finally, your home then goes through a closing process. The title changes hands during the closing phase – and you, as the buyer and new owner, take possession of the property. Congratulations on buying your first home!

Give Mark and Debra a call at 901-239-6041 to talk about making your first home buying experience a positive one that ends with you owning the home of your dreams.