Buying your first property as an investor should be an absolutely thrilling feeling; but it can also make you just as terrified by the prospect, if not more. Am I working with the right people to make my job go as easy as possible? Will this building actually help me reach my financial goals in the long run? Would I have a good backup plan if this investment doesn’t work out?
These questions and more can make any new investor weak in the knees. But don’t fret! If you keep all these tips in mind, you’ll start off on the right foot with nothing holding you back to succeed!
Know the TRUE value of the house
Building a good rapport with the seller of the property you’re thinking of buying is very important, of course. However, as trusting as they may be, you should never ever take their word on the price, no questions asked.
It’s not even a matter of whether the seller is disingenuous; it’s knowing the absolute facts that the other party might not have even been aware of before putting their house on the market. Thankfully, you there are a plethora of online tools that can help you find the best price. Here are some of the best options out there:
- Zillow: One of the most popular price evaluators for property these days, their “Zestimates” are incredibly in depth. If you look based on a town or city, for example, they will show you the total amount of homes currently on sale, the median home values estimate, and the home value forecast. They even include the average home values by the nearest towns and cities surrounding the searched area.
- Redfin: This site’s tools show you both photos and listing information for the home’s value. You can also talk directly to one of their agents who are available “seven days a week,” right on their home page.
- Chase: Here you can change the information about the house to arrive at a more exact estimate you’re looking for. Plus, the site provides info on all recently sold homes and any selling trends throughout the neighborhood.
- ForSaleByOwner.com: Their “Pricing Scout” tool allows you to see the average of both a regression and comparative market analysis to figure out how much the property is worth. You just need to register to use their service.
- Surefield: This site is also a good choice, letting you adjust how narrow or wide you’d like to see the range of comparable homes, and also include and exclude other variables in your search.
You also shouldn’t take the seller’s word on the home’s condition as a factor for the price. Even if they say they had an inspector look, hire your own to have it evaluated with your own approval. Have a licensed inspector take a look over the property and give you an estimate on any renovations that have to be made. Meet up with a home evaluator and come up with the closest estimate you can get so you won’t end up having to pay for much more than you’re ready to deal with.
Know the seller’s motivation
An easy way to tell how smoothly the property buying will go is to know what the seller’s motive for letting go of their property is. The reason why it’s important is so you know when they’ll be ready to move out, whether they want to leave because the house is now a lemon, and figure out if communicating with them will or won’t be frustrating.
You basically need to ask the right questions to probe their urgency and how will they are to sell. Here are some you can ask them to test the waters:
- “Do you want to get moved into your new home before [BLANK]?” Time can be a very crucial matter for the person letting go of their property. Maybe it’s getting close to winter and they want to get set up in time to get the heating matter settled before it gets too cold. Maybe they have a child and want to finalize everything before their school semester starts in their next neighborhood.
- “Why do you want to sell your home?” It’s a straightforward question, but also the most simplistic way to figure out what their goals are. And once you found out these goals, you’ll know how serious they are about it. For example, if they say something like “We just want to move into a bigger house,” then they’ll likely have a wait-and-see attitude and possibly decide on just staying where they are.
- “Are you interviewing with other real estate professionals?” Knowing who your competition is will let you know how urgent the seller is, and will give you the opportunity to one-up the other buyers by having the conversation go into a “Well, how about I offer you this deal, compared to what the others are saying.”
See if you can finance your home through other sources
The great thing about home buying in modern society is that you don’t have to pay from your own back packet 100% of the time. If there’s a grant you can apply for, or a housing finance authority who’s willing to work with you, use it!
In Connecticut, there’s the Connecticut Housing Finance Authority (CHFA) who, as they state on their website, “offers a variety of home loans at below-market or competitive interest rates to eligible first-time homebuyers and to prior homeowners intending to purchase homes in areas targeted for revitalization.”
They have plenty of programs to choose from that include a Downpayment Assistance Program (DAP) that will help you pay upfront expenses like down payments and closing costs if you’re qualified.
Housing grants come in many shapes and sizes for even things like new windows and doors if needed. In fact, if you look in the right places, there are grants you don’t have to pay back unless you play on later selling the house yourself!
Aside from that and seeing if there are any grants you can apply for on HUD.gov, there are other money-saving plans you can work with. For example, instead of settling for a 30-year mortgage, see if there’s a shorter 15-year plan in case you might have to make a contingency plan in the future.
Use all the rental space to your best benefit!
If the house you’re looking at is large enough, definitely consider turning it into a two (or possibly more) family home.
Spreading out the space to accommodate for more tenants is a fantastic way to earn more money, of course, but one possible way to save a lot of money is be one of the people living in said property. In the best case scenario, you can be living there with the other tenant(s) covering the whole cost of living – meaning you have a space to live for free!