For first-time investors, this road can be confusing and a little scary at times. We can help! Our expertise is to work with our clients to make the investing process as easy as possible. Here are nine steps that all new investors should take to make the road a smooth one.
1. Have your finances in order. Speak to a lender and make sure you understand what loan types are available to you and then decide which one(s) you intend to utilize. Try to work with the lender to fit the loan program to your specific financial needs. Understand that this is not just about down payment. In order to qualify for your first investment property, you will have to “carry” that note payment in your debt ratio. In other words, the lender cannot count the expected rental income as part of your income. This usually does not occur until you have some type of rental income history and most lenders like to see this income stream for at least a year. So, on your subsequent purchases, you are in much better shape, because you will then be able to count a percentage of your annual income toward this. So it is imperative to work with your lender to determine the amount that you qualify for, given your current debt ratio.
2. Decide what type of investment you would like to own. This will partly be determined by what you qualify for; but you should read up on the advantages of owning single family investments versus condominiums versus multi-family. As you gain more experience and as your portfolio grows, your investment preferences will change over time.
3. Contact Visions Realty & Investments to schedule a personal consultation. Our sales associates will walk you through the process and answer any questions. We work hard to make real estate investing as turn-key as possible. Our associates will give you a vast overview of the Dallas / Fort Worth area as well as consult with you as to your choice of property type and which area of the Metroplex you’d like to invest.
4. Schedule a visit to the Dallas / Fort Worth area to view properties. After your consultation, your sales associate will begin to send you information on specific properties to meet your needs. It’s usually helpful for most investors to make a trip to the Metroplex to see the properties first-hand before you purchase.
5. Locate your property. With the assistance of your sales associate, you will find the perfect property for you. Your sales associate will walk you through the process and assist you every step of the way. This is a very exciting process!
6. Formulate an offer to the seller. Once you’ve chosen a property, there are several different types of contracts that are used, depending on which type of property you choose, i.e. condominium, multi-family, commercial or single family.
7. Perform due diligence. This is a period of time that varies depending on the type of property you choose (residential contracts usually require anywhere from 10 to 15 days.) During this time, you will have the opportunity to perform inspections on the property to determine the overall condition of it. This inspection will reveal any structural deficiencies with the property. The charge for this inspection will vary depending on the number of units that you are purchasing. Typically for a single residence the range is $200 to $300. You can expect extra charges for each additional unit. What this will not reveal is any type of make-ready and cosmetic expenses that you will need to consider.
8. Complete the financing. It is important that you work closely with the lender to get all documentation to them that is necessary. Once the option period is over and your loan is approved and the title work is complete, closing can take place quickly. Chances are your closing documents will be sent overnight to you to sign. The property becomes yours when the documents are back in the hands of the title company, the seller has signed their copies and the loan funds.
9. Determine property management. With the assistance of your sales associate, depending on the location and property type, they will be able to recommend appropriate property management companies to you. Our sister company, Frontline Property Management, would be glad to schedule a consultation with you in order to give you an overview of what their process and costs of management would be for your property. For more information, visit http://www.frontlineproperty.com.