Follow These Tips When Buying Your First Investment Property

1. Get the Math Right

One of the biggest mistakes new investors make is miscalculating the expenses and cash flow of owning a rental property. For example, many newbie investors underestimate the cost of making repairs and over-estimate the amount of rent they can charge after the repairs are made. It’s important to do a little research into the surrounding properties to find out what comparable costs and rents are in the area. 

And remember, the longer it takes to make the repairs, the more your property costs you because you have to pay the mortgage, taxes, insurance, and utilities out of your own pocket in the meantime. 

2. Don’t Get Emotional About an Investment

There is no place in real estate investing for emotions. It’s a business, and as such, you need to stay detached and patient. Getting emotional about an investment property can lead you to make snap decisions that can cause you to miss opportunities or cost you money. 

As an investor, you’ll likely deal with several buyers at once, with only one deal working out in the end. You can’t let your emotions or the emotions of the buyers influence your decisions. The name of the game is profit, and for your best chance at success, leave your emotions out of it. 

3. Negotiate

Most sellers expect to negotiate with interested buyers. If you don’t do a little negotiating, the sellers may not take you seriously. Set a price in your head that you refuse to go over and stick to it. Offer the lowest price you think the sellers will accept and get ready to haggle. 

You may go back and forth with the sellers several times, but if they refuse to accept an offer that falls below your top price, be prepared to walk away. If you’ve stayed emotionally detached, this should be relatively easy. 

If the sellers are in a hurry to get out from under the property, they will likely call you back in a few days to say they are willing to take your offer. By sticking to this practice, you will almost always get a good deal. 

4. Have Financing in Place Before Making an Offer

When buying real estate, most sellers want to know you can pay for their property. Whether you’re purchasing a property to flip it, or you plan to hold it as a rental property, you need to get pre-approved for a loan before ever making an offer. 

Real estate investing is a great way to make money and fund your retirement, but it requires a lot of knowledge and work to be successful. If you’re looking to make your first investment property purchase, following the tips above can make it a successful one.