10 Tips to Consider Before Buying Your First Investment Property

Taking the initial plunge into investing can be a nerve-racking move. What should you buy? Who can you trust? And most harrowing of all: What if you end up losing money?

1. Are You Ready to Invest?

2. Do You Have a Plan?

3. What Kind of Property Should You Start With?

4. What is the Neighborhood Like?

5. What are the Local Vacancy Rates?

6. Do You Know All Your Investment Expenses?

7. How Will You Finance Your Property?

8. Should You Self-Manage or Hire a Professional Manager?

9. Can You Be Your Own Bookkeeper?

10. Do You Have an Exit Strategy?

Always keep in mind that your investment property is used for one thing; making you money.

Your property is not only an investment unit, its’ part of your business. Always conduct your business wisely and with strong business ethics. You will make all the necessary repairs for your tenant to live safely and comfortably in the home. You want your property to be appealing to renters, but you don’t have to go overboard. While it’s important to add your personal touch, you must also make smart financial decisions in order for your business to survive.

Lets talk: Renting V.S Buying V.S Investing

America  is becoming a renter's nation and that's a good thing for buyers!

the baby boomers are phasing out and to old to care about buying a home and half the new generations are graduating and only care about mobility doesn't want to be tied down. That is a lot of people that's no longer interested in "the American dream" of home owner ship. But there is still power in buying a home, if you are renting your home and paying 1,000 for rent. On average the landlord is making 200-400 dollars in profit. So if you owned the same house you would be paying as little as $600 maybe even less depending on loan amount, credit score and some other things that factor in. What I will do is give you the pros and con's of being a renter, buyer, and what I think is the best option a investor

Renters:

Don't let know one try to talk you out of being a renter there are some major upsides to this option. First it's yours, you can use it as you see fit granted that its stated in your lease. But, you can paint it to fit your style and really use the space to your liking. Another upside believe or not is, its not yours your not stuck somewhere you don't want to place roots at if you don't like. Just give your landlord the appropriate amount of time if it's a month to month lease its typically 30 days or more if its a year or longer lease 60 to 90 days or more. You might have to pay a fee to break the lease but if you just got the dream job at google it'll be worth it to have that flexibility. Upside #3 someone else takes care of the property all you have to do is give a quick call to the landlord and say "Hey, my roof is leaking can you come fix it". Upside #4 No utilities the landlord/ or property management company will pay the bills for you in order to keep you as a tenant. You have a lot of negotiating power as a tenant more then most people think if you're staying in a certain area for longer then 2yrs you can ask for a lower rent for a longer lease. Just make sure you're happy who you're renting from. In fact everything on the lease is negotiable.

Now for the downsides #1 it's not yours you can't knock down that wall to give your space that Feng Shui look you were looking for. You have to ask can you have a pet or face fee's and penalties. (most allow small cats and small dogs any thing bigger your going to have to pay maybe.) you can't change out appliances but like I said everything in the lease is negotiable. downside #2 Most and I mean the majority of landlords and property management companies (I use that term loosely) sucks I mean they are bad at everything property management related. Most don't have any systems in place to take care of a tenant they don't have someone to respond to leaky faucets, clogged drains, or just to keep the common area clean. Downside #3. You can't get a hold of them unless the rent is late. Downside #4 Most are still stuck in the stone age when it comes to paying rent. You can't log on a site under your account and pay rent with your card while the technology exist most landlords are small and/ a accidental landlords so they don't keep up with it or don't care. Downside #5 rent will always increase sometimes 25 to 50 bucks a year or more.  When it comes to renting do your homework its a relationship like any other make sure it's one you want to be in. There's great landlords and there's slumlords.

Home buyers:

The American dream is still alive and well. The white picket fences, the manicured lawns, and Sunday barbecues while watching the football game. Yes there is pride in home ownership as well as pitfalls or some call them a money pit. Upside #1 Its yours and all yours if you want a totally open concept it's time to start knocking those pesky walls down. if you want to turn your backyard into the playboy house grotto grab that back hoe and start digging, bunnies still won't come but you can dream. and it's that sense of ownership that we all want. Upside #2 Tax deductions on everything home appreciation and depreciation you can get taxes back at the end of the year. Disclaimer I am not a C.P.A (certified public accountant) consult one about this. Upside #3 my favorite is equity which is any money over what you owe in the property ex. if you owe 60,000 on your home but it's valued at 100,000 that means you have 40,000 in equity, and you can pull that money out of your home to do anything with it. Like... buy more real estate. Upside #5 your mortgage payment wont increase (as long as you have a fixed loan) but the value of your house will.

Downside #1 If you want to alter the psychical structure of your home ex: add a extra floor from 2 to 3 stories often time you have to notify the city or county you reside in and the whole process is just a headache. Downside #2 All the maintenance is on you, you have to find someone or be that someone to fix every little problem around the house. Downside #3 You might get stuck with a house you can't sell in the future. Due to you owing more then the house is worth, how the loan was structured or the condition of the property where no bank will give someone money to live in it. To me if you're going to live anywhere for more then 5 yrs. you should focus on buying.

Investor:

Oh the joys of being a investor like I said  at the top if you have a tenant paying $1000 and your mortgage and is 500 and upkeep is 100 a month then you're making 400 a month. Even if you're a accidental landlord making a extra $400 a month is awesome. Upside #1 Building generational wealth you can set your family for life with a few properties and if you buy a single family home up to a 4plex/ quad-plex (4 apartments in the building) the bank will treat it as the same loan. So if you have 4plex filled up that's $4,000 a month your mortgage is still 500 minus a extra 100 per apartment for upkeep you're still making $3,100 a month. Upside #2 if you're a great landlord you could have life tenants. (dreams do come true) can you imagine someone so happy with your service that they will pay you every month for their entire life. Businesses would fight for this type of person. Upside #3 Living rent free instead of renting out the entire quad-plex live in one apartment and rent out the other 3 sure the profit will be smaller but your having people pay you for you to live there for free. Upside #4 Rent will always increase I've seen investors buy a apartment complex and realized that the apartments was paying 100-200 less then what the market/ area was demanding he jumped on this opportunity. Granted he had to pay some upfront money to bring the property to that asking price but he instantly seen a 35% increase.
Downside #1. Tenants skipping out in the middle of the night. I had it done to me and heard it done to other people tenants would just leave without any notification for whatever reason. And sometimes trash the place so now you have to have it cleaned and redone for the next person which can take a month or two. So that's 2 months no rent and try to track down the asshole that ran out on you to try and recover rent + damages. Downside #2 This should be number 1 but this is a business I don't care if you're a accidental landlord you have someone health and welfare in your hands you have to treat this with a tenant first type attitude if you are not up to the job find a credible and reliable property management company to handle the day to day and you just collect mailbox money. Downside #3 The money pit. If you are looking to get into investing full-time you have to know how to run numbers and realize you are not living in the property. So don't put in the top of the line fixtures unless you are flipping top of the line homes. You can see your money go down the drain very fast and will never see a return on your money hence the money pit. This is truly the path to go down in my opinion it gives you amazing flexibility and allows you to live life on your terms. Plus it can be ran off of very little of your own money in your house but more on that later.

Double your failures triple your success

Throughout my real estate career I've made so many mistakes that I'm thinking about making more

The list of my mistakes are many and they range from petty to significant, from tiny to ginormous.  One day I'll find myself not filling out the contracts properly. The very next day I can forget to unlock the front door of my open house and then sit there wondering why I don't have any traffic. Basically l made every rookie mistake you could make as a new agent.

Did it stop my flow? Sometimes!
Did it make me question should  I even be doing this? Hell yea!

I quit 50 times everyday in my head. Every time I had to go through a new challenge or anything that would pull me out of my comfort zone, I'd have to fight the urge not to give up. I'm just like everyone else while we may not share the same fears, the act of pulling out of our comfort zone or taking away the safety blanket freaks us all out.

Our brains are wired to protect us so when we face anything new, or preconceived as dangerous, our brains instantly start flashing red lights. It screams DANGER WILL ROBINSON do not go this way. But here's the truth of the matter, our brains are filled with all kinds of prehistoric defenses from the stone ages. It simply doesn't know any better. It just want's to keep us safe. We must tell the little voice in our heads to shut up, sit back, and buckle in because we're doing it anyway. School taught us that mistakes will result in being punished and life will except nothing short of mediocrity. Well I say to hell with all the programing!

As humans we learn through mistakes. Through trial and error we grow. We fall off the bike again and again, but as long as we continue to get back on, we inevitably learn to RIDE! Before you know it we're riding with no hands and doing wheelies. You must approach success in life and business the same way fail forward.

 Double your failures triple your success! 

 

I love my haters. You should to!

I need new haters the old ones are starting to like me!!!

Haters are the new black. No matter what you call them; critics, naysayers, enemies,  or just plain old haters, they will always be around. Haters show up in greater numbers the better you're doing in life.

Ever hear the term "new level, new devils?" It refers to the phenomenon that occurs every time you reach a higher stage in your life and/or career. Someone shows up to tell you that what you did wasn't that great they will do or say whatever they can to try and take the wind out of your sails. Here is how I deal with my haters/supporters in disguise.

 

1.) COME TO THE REALIZATION THERE WILL ALWAYS BE HATERS. There will be people who don't like you no matter what you do, how great of a person you are, you can walk on water and someone would say it's only because you can't swim. For us dream chasers it just comes with the territory and the quicker you realize this the better off you'll be. Each time you become more famous and gain more respect you gain more haters. Just think how many people hate the Richard Branson, Shawn Carter, Bill Gates, and Elon musk of the world trust me you want that kind of hate it means you made it lol. Imagine becoming so famous so respected that people will start mass producing lies about you  Kanye West said "There will always be haters that's the way it is hating men, marry hating women, and have hating kids!"

 

2.) IT MEANS YOUR DOING SOMETHING RIGHT. People will instinctively fight against change no matter how well it will benefit them. Change is scary it makes you come of your comfort zone and people will dislike you and talk bad about you for doing that. Can you imagine the amount of backlash and the people talking say Steve Jobs was a idiot for trying to create the I-phone a computer company trying to get in the cell phone industry. The closer he got to making it a reality the more people was in his ear saying this will fail it'll never work. Just keep grinding despite what anyone says often times they're speaking from their own fears and failures.

 

3.) YOUR CAN'T BEAT FREE PRESS AND EXSPOSURE. I have found it is often those that are the closest to you that will be your biggest haters. they will spread your name around the world, of course mixed with their version of how you or your company sucks. Google someone you admire you'll see someone a article or blog saying how horrible this person is they swindle everyone they come across. Some will go to great lengths they will talk bad and down about you to anyone that will listen. I have a friend who owns a publishing company and she had to drop a author this person then turns around and starts a blog just to bad mouth and tries to discredit my friend. She went as far to trying to write a book trying to ruin my friends company. Despite the persons attempt my friend company thrived because all the extra and free exposure this author gave the company.

 

4.) CRITICS CAN BE A GOOD THING. Often times myself included in this is we can't take constructive criticism there are people that means well and is giving helpful insight to building a better mousetrap. We are so close to what we are engaged in we can't see the mistakes we are making and can be avoided. Now if they are hating and being the ultimate critic still hear them out they might give some actual valid advice. They have a problem for every solution and if you take this in to account you can save yourself and company from a world of hurt. Plus this does two things one, your giving acknowledgement to the contribution this person made and two, It stops the "I TOLD YOU SO" if that person was right. No one wants to hear "I told you so" from a hater it hurts that much more they say it with a smile. When you give them recognition it takes some hot air out their attitude and the start being more receptive and ultimately you make a fan out them. It's just like Abraham Lincoln said the best way to get rid of a hater is to make them a fan.

Business lessons learned through video games

I love playing video games. I once considered them my anti-drug. That was until I closed my first real estate deal. That was a high like no other and I am truly addicted. There hasn't been a game invented that can keep me from my realty fix. But I still enjoy gaming and have gained valuable lessons about business and life through playing video games.

Lesson one… 

It takes timing: it didn't matter if I was looking for love, trying to get in front of the next client to close my deal, or trying to pull off a headshot in Call of Duty, timing is important. The more I rushed it,  the more likely I ended up being hurt, burned in a deal, or being killed in the game. ( It was a lucky shot he didn't even see me.)

Lesson two… 

You need a strategy. In almost all of the games I play there is a need for a plan of action. The same holds true in business.  The first thing you need to do is stop and think of the most effective and efficient way of achieving your goals. For me it is networking and building relationships with the correct people.

Lesson three… 

Build a dominant team: business and competitive gaming are team sports. And, weather your taking the flag and running back to home base or fighting for market share. You only want the people that's going to fight as hard as you if not harder. You want the guy / girl to come to the table with the insight and skill that will improve the team and ultimately win the game!

Lesson four… 

Be aggressive : In life, gaming, and business if you don't fight,  you will lose and that's no fun for anyone. Why even show up if you're not playing to win. You must go after what you want in your life. There's nothing like struggling level after level, and finally defeating the villain and saving the princess or making calls getting pass every "no" and objection they throw at you to finally get that "yes."
I have found that the same skills required to progress in the various games that I enjoy can be used to progress in the world at large. That's what makes this game called life so much fun. There is levels to this sh* t, so set a goal and go play.