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Deciding to buy investment property is one of the best decisions you will ever make for yourself. However, it isn't something you can decide to do one day and then rush out and do the next. There is a process that you have to learn and lots of information to digest. If you think you have done that already and you are now prepared to go out and make your first purchase, here are five questions to ask that will help you to prepare. What type of property am I interested in? Are you interested in a single-family unit, a duplex or maybe a multi-family complex? Are you interested in commercial real estate? What about raw land? How you answer this question will determine other things that you do later, such as how you go about financing your investment. It is also best to focus on a particular type of property so you don't go on wild goose chases and so your team knows what they need to clue you in on. Do you have a specific area that you are interested in? Do you want to invest in the city where you live? If not, what part of the country do you want to invest in? The Internet is your best tool for determining what area of the country you would like to put your time and money into. Ken McElroy, author of “The ABCs of Real Estate Investing,” calls this Level I research. Later, once you have decided on a part of the country and a city in which to look, you will need to decide on a neighborhood. You will discover that during McElroy's Level II and Level III research. Do you have a financing strategy? The type of property you are looking for (as well as your own assets) will determine how you can make your purchase. If it is a smaller investment such as a house, you may want to pay for it outright. However, even if you don't have the money to pay for it, if it is a investment property that has generated cash flow in the past, the bank will probably give you a loan. They know that they will get a ROI regardless of what happens to your investment. If you are looking at a larger piece of land that you can't afford outright, you will probably be able to find other investors to partner with you. Do you have a team in place? It's just too hard to be successful at this without a good team. This is simply because of the large amount of work involved, and so many disciplines of knowledge involved, that you simply can't do it all by yourself. There is not enough time for you to become proficient enough with real estate law and accounting, plus broker your own deals and manage your own properties. It is necessary to delegate. That is why McElroy recommends you start with an attorney, an accountant, a broker and a property manager. After that, you may also need appraisers, tax consultants, a surveyor, a structural engineer, an architect, an estate planner and more. What is your repair budget? This is very important. Knowing this will help you choose the areas of town to look around in because some areas may be full of old buildings or some newer buildings may actually be in serious need of repair. You will have to know what you are getting yourself into and whether you can handle it. This isn't a an exhaustive list of questions. Once you start your investment property adventure, you will discover a never-ending list that you will need to pay attention to. But these will get you started on the road to asking yourself the right kinds of questions. Sometimes asking the right questions is more effective than the answers themselves.
Article Source: http://www.financemanual.com
Author, Realtor, and Investor Alex Anderson Owns and Manages Several Minnesota Investment Properties. Specializing in Helping Others To Build Wealth and Prepare for Retirement, Alex Also Provides Minnesota Investment Property for Clients Who Wish to Invest Locally. To Learn More Visit: minnesota.greatinvestmentproperty.com.
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