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Buying Your First Investment Property

 

Investment properties can be great ways to supplement your income, or to help you start a brand new career. Buying your first investment property can be an exciting time, but there are plenty of things to consider before you put your money into a revenue-generating property.

Consider Working For An Investor First

The worst thing a new real estate investor can do is walk into their first project without having any understanding of real estate investing at all. It is best to start your career by working for an experienced real estate investor to learn the ropes and gain some valuable experience.

Avoid Losing All Of Your Money

New real estate investors are often tempted to go “all in” and put all of their money into that first property. The problem is that if the property fails then your investing career could end before it even gets started. It is best to not use all of your investing money on your first property, and you should also avoid stretching your credit to its breaking point as well.

Remember Holding Costs

When you set up the budget for your first investment property purchase, you should remember to include holding costs for at least six months. Holding costs are the ongoing costs you will incur each month before you are able to sell the property. Holding costs typically include:

  • Mortgage payments
  • Tax payments
  • Maintenance
  • Utilities

Consider A Property Management Company

Your first investment property is going to be a learning experience, but you can cut that learning curve down considerably if you rely on professional assistance. Even if you are only renting out one property to start, you should hire a property management company to handle everything from collecting rent to maintaining the property. If you find later that you can handle those tasks yourself, then you can choose to drop the management company. But if there is extra room in your monthly rental budget, then a property management company can make life easier.

Avoid Cutting Corners On Remodeling

Whether you are selling your first investment property or renting it out, it is important to make sure that you do quality remodeling work. Savvy property buyers will be able to see a property that was remodeled using inferior products and methods. If you want to maximize your investment and establish a strong reputation for being a reliable investor, then do not cut corners on your remodeling.

Always Rely On Experts

Unless you are an expert contractor, then you should take a contractor with you when looking for your first investment property. Many new investors wind up losing money on their first properties because they did not see the problems that cost investors money. You should rely on professionals in every aspect of your business from contracting to legal assistance if you want to make good investments.

Smart investors who are new to real estate investing always start off with one property to limit their exposure to financial issues. As you prepare to buy that first property, you should understand how to make the right decisions and rely on the right people to make your new real estate investing business a success.

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