The first property purchase for new home investors is a huge milestone and can set the tone for future investment opportunities. If you’re new to investing, you may not know how to find the perfect investment property or what to do after you buy it.
In this post, The Aitken Home Team will discuss five tips for new home investors.
5 Tips For New Home Investors
1. Be realistic
New home investors often have grandiose dreams of building huge investment portfolios and accumulating wealth at a rapid speed. However, the key to smart investing is to establish realistic goals.
Ideally, you want to think about your first real estate investment purchase as a learning opportunity. Know that you will make mistakes along the way, and don’t be surprised if you only break even or lose a little cash after your first year.
Don’t pressure yourself to earn a profit your first year and know how big of a hit your finances can take in advance. That way, you won’t be surprised if you face an initial loss.
Overall, the key to a successful investment is to surround yourself with experienced investors who are willing to offer you valuable advice from their own experiences.
2. Be honest
Consider your strengths and weaknesses. Take note of what you’re good at as well as your anticipated challenges and fears. Think about hiring or consulting with others who excel at the things that are harder for you.
In addition, ask yourself if you’re being realistic about the neighborhood in which you’re looking to buy. Are you considering all possibilities of the types of tenants you wish to draw and the cash flow you can realistically expect to generate?
Take time to research LLCs and talk to your insurance agent regarding possible liabilities. Also, focus on important details rather than “what-if” worries.
3. Be smart
Your finances will likely influence the manner in which you invest. For example, purchasing a 25-unit apartment complex right out of the gate is not likely to be your first investment experience unless you are partnering with a seasoned investor.
Turnkey properties requiring minimal dollars and minor improvements will likely be the way to go for a beginning investor. Remember: you are just starting out and you need to get some experience under your belt when it comes to taking on larger projects.
Over time, you will find yourself establishing relationships with other investors, contractors, and additional professionals who know the business and can help you take on larger projects. Don’t seek to overachieve right off the bat- smart investing takes time.
4. Be specific
Start small and research:
- Exactly what you’d like to purchase
- Where you want to purchase
- The highest possible amount of money you can spend
- The skills and processes that will be necessary for achieving your goals
Research, research, research! Be specific about what you wish to accomplish, a realistic timeline. and your budget. Also, list specific liabilities before moving forward with your plan.
5. Be strategic
Be sure your vision matches your strategy and that you have an action plan which supports both. While your goals and vision might be aligned, your strategy might be your undoing.
Know what you want and how to get it. Keep your expectations in check, be honest with yourself, zero in on an achievable target, consult experts, and align your strategy and vision and you will be an unstoppable force!
Related: “6 Tips Re: Capital Gains”