The Trick To Buying Your First Investment Property.
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Buying Your First Investment Property with CTA.mp3
[00:00:00] Hi, Jacob Ash here to talk about the trip to buying your first investment property. There are a lot of different avenues and ways to be able to purchase your first investment property regardless of the market you’re in. There’s going to be a lot of whole sellers and buyers and sellers who focus specifically on selling properties to investors like yourself that are looking to buy your first investment property. So the key is to really just get your name out there.
Know who the players are in the market. Who has good deal flow and then make sure that you are using those avenues to get familiar with the market that you’re in. I would recommend getting involved with local seminars and even googling wholesalers in whatever market you’re in whether it’s Phoenix Arizona, Dallas Texas regardless of the market.
Putting your name out there to make sure that you get on as many lists as you can. So once you find those whole sellers you can reach out to them via email or text your phone call and they will be more than happy to add your name to their wholesale distribution list. You can then formulate your own game plan of what areas you want to invest in and start receiving those lists.
Secondly you want to make sure you educate yourself and the investors that I’ve worked with and the investing that then I found that I’ve had the most success by far. When I have stuck to a certain game plan or niche specifically to what I want to accomplish. Whether that is to purchasing a property that’s within your budget or the area that you want to focus on.
So make sure that you have a good game plan prior to locking up or tying down a property. Once you start having that list come through and you kind of know what you’re going after the area or the type of property you want to make sure that you educate yourself on what actually makes a good investment property. So there are formulas out there that you can get for free plenty of them. And understand just kind of the basic terminology such as cash on cash return cap rate and apply. Net operating income. Understanding vacancy rates.
How maintenance will play a role in your investment property. But make sure that you understand kind of the basic terminology of the investment world. Then thirdly once you start analyzing a property it’s very very important to understand who else should be on your team to make sure that that investment property performs how you hope and want it to perform.
Obviously you will need an inspection person a license Inspector. Probably the most important is a key handyman or maintenance guy that you can refer to when there are issues with the property. There are gonna be different vendors out there and sometimes you’ll need a myriad of different vendors depending on the property whether it’s flooring paint a C roof.
No matter what problems might come out with the investment you want to make sure that you know someone who is been vetted and that you trust that we’ll get the job done. So make sure you have a really really strong team and then you want to have a good title company to be able to bounce ideas off and to check out the obviously the chain of title things like that and then just a little hint you can always ask for it investor rate since you are an investor now someone else who you want to have on your team is a great licensed mortgage broker or banker.
Not all investors obviously have the cash to just bail out enough cash to be able to purchase the property free and clear. So you want to make sure that you have someone that is savvy enough with local rates and your financial situation and know what you can qualify for. The biggest advice I can give you when you’re doing these calculations and formulas trying to figure out what you can afford to purchase and what makes a good investment for you and in what makes something that you’re happy with. Really really understand the formula that some properties are going to make much better sense since leveraging and then sometimes they’re going to make better sense to just pay out cash for if you have that amount of cash available.
So there is actually if you go to some of these investment formulas you can actually plug in the numbers for your investment and it’ll tell you what the cap rate is meaning that what the kind of returns you can expect if you’re paying cash for the property and it will be much lower than if you were to do a formula that spit out the cash on cash return and vice versa some make. Some might spit out a cash on cash return at 3 percent but then if you paid cash for the property it was it’s 8 or 9 percent cap rate which is it. Which is a great cap rate.
Basic information you’re going to want to know to be able to understand that formula is whatever the yearly taxes are. What kind of vacancy rate you’re looking for. If there’s an way what the monthly actual fee is or quarterly each way and then the P.I. the principal and interest whatever the payment is as well as insurance. What kind of insurance you can be paying for that property and then the property management fee when when you’re paying a property manager to help manage that property portfolio.
Usually the property managers are quite experts in the areas as well. Whatever you’re investing in they have local knowledge and local insight into what areas are good areas invest in what areas. Maybe they don’t recommend but really bounce ideas off of the local experts. When I purchased my first investment home I was fresh out of high school and I actually set meetings with several good friends of mine whose parents I know had done that for a living or on the side and I just found out as much information as I could.
And at the end of every interview I’d always ask What’s a book that you recommend that you would read to help me out with this thing that I’m trying to accomplish. So go after that as much as you soak up as much knowledge as you can’t really really keep you from making mistakes as well. And then the last piece of advice I’d give you in Purchasing your first investment property is don’t get greedy and don’t try and hit a grand slam on your first purchase.
Really just go or something that you know is going to give you a steady investment that you’re happy with you’re not going to kill it on the return but you also know that you’re not going to lose everything you’re going to be at play it safe and just give you something something very manageable. A good one to kind of learn the ropes I promise you you are going to learn a lot from Purchasing your first investment property so make sure that it’s one that is going to treat you well on the back end. Thank you.
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