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Buying Your First Investment Property
"Begin With The End In Mind"
I first heard the phrase "Begin with the end in mind" in a Steven Covey book called "The 7 Habits of Highly Effective People". This expression makes a lot of sense because the fact is, you can't get where you're going, unless you know where you want to go.
Most new investors understand that real estate is an investment vehicle that makes sense. We all know that many fortunes have been built with real estate. But when you are first getting started, all the available information can be very confusing. I often receive emails asking "what strategies should I use?" or "Where should I look to find deals?".
One reason these issues are so difficult to understand and sort out when you are new to the investing game is that the answer to the question can be different for every individual.
Seminars tend to package information in a "one-size-fits-all" crash course. But this inevitably leaves unanswered questions for each individual user. Simply put, each person has their own individual situation with regard to credit, income, employment, assets, etc. All of these factors can affect your investing choices and objectives.
Compounding this confusion is the sheer number of strategies. Should I own rental property? Should I fix up and resell? How about Options? Or, how about buying tax leins? There are so many choices, how is one to know what to do when just starting out?
I can remember floundering around myself. I spent thousands of dollars on different courses, trying to put all the pieces together and gain enough understanding to know what I should do first.
It seemed that no one wanted to tell me anything useful unless I paid them first. I soon found that no matter how much money I spent, there were many unanswered questions. I felt frozen by fear, because I simply did not understand what to do first. As a result, it was several years before I actually felt comfortable enough to get directly involved in buying a property.
Today, after having seen and participated in many deals, I know that step one is decide what you want real estate investing to do for you. In short, where do you want to go?
Like any trip, you start out by deciding where you want to go. Once the destination has been chosen, you figure out the best way to get there.
Many of the most successful and wealthy investors I know, built their fortunes with rental property. Some of them own 40 or more rental houses. Some of them own commercial properties like gas stations, storage facilities, or office buildings. They each had the same destination, that of cash flow from rental income, but two drastically different ways of getting there.
Frankly, most of the really successful investors are very patient men and women who build their portfolios slowly over a number of years. They are cautious and prudent, buying only when they know the deal is a good one.
Today, many people are lured into investing because they have heard the stories about how you can buy property with no money down, and take out enough cash at closing to pay off all your debts. This is possible, but creating one debt to pay another does have it's risks.
Let's say that your ultimate objective is to achieve $5,000 per month passive income from rental property. Now, think of that objective as if it were a city on a road map.
Most cities have a number of different roads you can take to get downtown.. It is the same way with your investing. Different people will arrive at the same destination, each one using a slightly different route to get there.
Once you decide where you want to go, your route to your destination will be determined by your financing options. .
If you have great credit, income for which you receive a W-2 statement, and lots of cash for a down payment, your financing options will allow you to take virtually any road you wish. The fact is, good credit and cash will get you where you want to go a lot faster. But it's not the only way.
If you are credit challenged, self-employed, or lack cash for down payments, your ultimate destination can be the same, but you will need a different route to get there.
Your financing options determine the route you have to take to get to your destination. In essence, the answer to getting started is find out what kind of financing you can get, and then find deals that work with your available financing options.
If you can't get any kind of financing at all, you can still buy deals where the seller will agree to finance the deal, or some scenario where financing is provided without you having to qualify.
If you have decent credit but no cash, there are investor loans with low down payments, that may make it easier for you to get in with little cash.
If you have great credit and cash - hop on the expressway. Look for any good deal, since you can get a loan at excellent rates, in addition to taking advantage of any good seller financing deals that come your way. You have the most options for getting to your destination.
No matter where you start from, you can still wind up at the same destination, and achieve the same objective.
Step One: Decide where you want to go. Then, get with a good lender to find out which roads you will be able to take. Even if you have to start out on the "no cash, no credit" back roads, remember that sooner or later, if you keep driving, you will find an access ramp to the expressway.
Donna Robinson is an investor, author and consultant on real estate investing, located in Atlanta, GA. Read more of her articles and get her newsletter on her website, http://www.RealEstateWholesaling.com
Her email address is firstname.lastname@example.org
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