Investor University
So, you have watched every single flip and fix show, check.
You have watched 7 thousand hours of You tube video Check
You have even paid for the 3 day workshop that teaches you how to be an investor for little or no money.
Well its possible, there is no sure fire way to become a top notch investor, there is no ideal checklist that you could use and find the predictable nature of a property, that’s why I’ll give you a few trade secrets to get you you started in the right direction.
First of all, HIRE a Realtor, Realtors do not earn one red cent until the deal is closed, their commission is actually paid to them by the sellers agent, meaning not one penny will come directly out of your pockets.
It doesn’t matter if your deal takes 5 months or 5 minutes, the pay out to the agent will be the same. The Residential purchase agreement is written in a way that requires some study and understanding, the document is a gold in if you know how to write a specific contract with specific needs.
There is language and deadlines that require you attention, failure to be on time or missing a specific document can cost you big. Even if you felt comfortable with doing your last 4 or 5 deals. Your Realtor has probably done 50 times more and will be able to guide you through potential loss situations. I learned early on that NO deal is the same.
Next, ask your Realtor to help you find properties that have a high cap rate and a sufficient GRM( Gross Rent Multiplier).
Once you have identified the property, here comes the hard part, look at the objective of the investment and try not to become emotionally attached to the property. You're almost certain to have a meltdown when you see what some renters will do to your property .
The investment property should match the area, avoid economic obsolesce by doing your home work on the
area and the specific zone. Ensure that your future properties is up to date and has features that wont drive functional obsolesce .
In my opinion, the more rentals in the area, the more likely that it will attract rental property seekers. It’s a lot like like driving to your favorite restaurant, would you go to an area that has restaurants on all corners or would you just risk going the one on the other side town with no other possibilities in the area?
Higher traffic and flexible neighborhoods are great for a certain type of investor. Grade AB are rentals are excellent but are expensive, C and D are typically lower in price and people that rent those homes/apartment…need to rent those homes, why else would they shop for a home in that area. Remember that your goal is to get as many tax deductions as legally possible and to have the tenant pay off your lien so that you can enjoy generations of freeeeeee income.
Fico score is not the only determining factor for investment property, several lenders are more interested in the NOI, the Rent roster/is it monthly or annual. Periodic tenancy is best for lenders because it does create stability. Monthly is ok as well if you plan to raise rents, typically (3-5%)annually.
Dont be fooled by the owner supplied Rent roster, ask to see a schedule tax form and rental deposits on an actua
l bank statement.
If you are planning un upgrading, please understand 121, 1031, get Estoppel agreements .
Run the number this is a big decision, determine the cost to close, taxes, insurance etc.