Whether you’re purchasing your first home or looking to invest in real estate, buying property is no small task. And when the market is struggling to recover, the task is all the more difficult. Fortunately, there are easy ways to come out on top in the real estate market, but there are at least five common rules you should follow. Indeed, the most successful, experienced investors emphasize these rules above all else to first-time investors.
Rule 1: Don’t Try to Do it All on Your Own
You may be a savvy negotiator whose successfully closed deals in the past, but it is important to understand that your luck can change at any moment. Consequently, it is imperative that get all the help you can get when buying real estate. In the video below, Frank Chen of REIClub.com suggest only working with knowledgeable and experienced professionals. 2. Always have an experienced real estate agent on your side. 3. Hire a professional home inspector. Hire a reputable attorney. 5. Insure your property with a good insurance policy.
Rule 2: Avoid Getting Bad Financing
There are a myriad of financing options available to home buyers today, but not all of them are created equal. There is an important thing to keep in mind about mortgages that should keep you grounded in the reality of the buying process: The purpose of a mortgage is to allow someone to buy a home that they otherwise could not afford. This is true of traditional 25-30 year mortgages as well as adjustable or so-called interest only loans.
As a buyer, you should educate yourself on the different types of loans available to you and be sure that you are financially flexible enough to endure rising rates or to convert to a different type of mortgage should the need arise.
Rule 3: Never Overpay
It is easy to be engulfed by eagerness to purchase your perfect property after conducting a long, arduous search. Still, such enthusiasm is commonly expressed by buyers overbidding on their desired properties. In the end, this can mean more debt and higher payments than you had initially anticipated.
If you do not know what other homes in the area have recently sold for, call your realtor or check home listings online before submitting an offer. There is absolutely no reason (that is, unless the home your buying is wholly unique among others in the area) for you to make an offer on a home that is inconsistent with other recent sales in the area.
Rule 4: Don’t Underestimate Total Expenses
If you’re completely new to owning property, you might not be aware of the total cost of owning a home. Indeed, the expenses do not end with the initial purchase or the mortgage payments. Unlike renters, home owners have to come out of pocket for any and all maintenance expenses. This includes tending to the yard, painting and repainting, and even maintaining and replacing household appliances as necessary. If that doesn’t sound like much, don’t forget homeowner’s insurance and yearly property taxes. Pretty soon, all of this begins to add up in a way that many buyers fail to see coming.
Rule 5: Do Your Research
The most damaging mistake you could make when buying real estate is to not do enough research on various aspects of the property. You wouldn’t buy a new car or TV without making sure it was the best option for fulfilling your need for your particular budget. The same consideration should be taken and then multiplied when buying property. This means that your research will need to extend beyond basic information about the home. Questions about the location, reason for the sale, as well as nearby prospective developments should all be on your short list of things to research about your purchase.
Michele Duchet is a graduate of Economics in Michigan, and regular contributor to some business magazines. She had worked partly as a realtor in Gladwin, Michigan and knows the ins-and-outs of real estate prospects and lands and home for sale in Gladwin, Michigan.