Market Conditions in Alameda>Question Details

Ken Eng, Home Buyer in Alameda, CA

Looking for investment property and what is best steps can I do now to be ready to buy when ready?

Asked by Ken Eng, Alameda, CA Sun Nov 7, 2010

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Hello Ken,

Most important thing you should do first is see how much you qualify for. Once you have that information, you should meet with a real estate professional to discuss your options and take your time in deciding..don't rush into anything.

Please make sure you are working with a knowledgable professional..we are all here to assist you. Feel free to call or email me anytime should you need further assistance :)
0 votes Thank Flag Link Sun Nov 7, 2010
Ken,

Owning investment property is starting your own small business. It takes time and effort to properly manage, even using professionals. Here is what I advise to help you.

1) Meet with your tax pro to discuss the short and long term considerations and how they apply directly to your tax situaion.

2) Meet with a financial adviser to discuss your long term financial needs (cash flow versus asset apprecation). This will help determine the type and location of the investment property you are going to purchase.

3) Meet with a realtor/property manager to discuss the ins and outs of owning investments after step 1 and 2 are perfomed. This is where the rubber meets the road. An experienced agent or PM will help reconcile your wants with your needs and help you focus to find that right situation.
Web Reference: http://bob2sell.com
0 votes Thank Flag Link Sun Nov 7, 2010
You need establish a business plan working with a real estate consultant is your best option who can q & a you determine what area of best suits your short and long term plan.

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0 votes Thank Flag Link Sun Nov 7, 2010
All good advice so far but in my opinion I'd move "meeting with a lender" up to the #1 position - I can't tell you how many clients have come to me AFTER spending a month or more looking for properties and then found out they couldn't even qualify for the loan. You may be just fine, but I think even the real estate agents would agree that even "A+" buyers get plenty of surprises during the lender process these days.

A half hour on the telephone and $15 for a credit report will give you all the info you need to make sure you can get the interest rate and payment you expect when you find that perfect investment property.
0 votes Thank Flag Link Sun Nov 7, 2010
Besides putting your team together --- a realtor who can help you find the property meeting your criteria and a lender to find the best loan and terms for your purchase -----then you should ask yourself several questions.

1. Will you live at the property? For example, if you buy a duplex/triplex/quadruplex, are you planning to live in one unit? The down payment and interest rates may6 differ for an owner-occupied versus non-owner occupied purchase

2. Are you looking for a fixer to flip? And do you have the financial resources to make the repairs? You can look into a 203K loan.

3. What type property? Condos and townhouses typically have HOA dues. So if you're planning to rent out the property, you should factor in the HOA monthly payments in addition to going market rents

4. If you haven't talked with a lender yet --- that's the first thing you should do because you will be asked to submit documentation regarding your income, debts, financial reserves, etc. before the lender can determine your credit-owrthiness (this is assuming, of course that you need to get a loan to buy).

Lots of questions to ask..but the bottom line is talk with your lender and realtor first before you look at property. You need to know how much you can afford, what your comfort level is in terms of financial obligations.

Good luck!
0 votes Thank Flag Link Sun Nov 7, 2010
I would say the most important step is to ask yourself "why do I want to buy" A lot of people neglected to do this and they ended up buying properties that were liabilities not investments. Once you have done that and if your going to go forward talk to a mortgage broker or lender and find out what your qualifed to buy. If your buying as a non owner occupied property you are going to get a different loan than if your going to buy as a property to live in one unit and rent out the other units. If your buying for income you should look at properties that if you put 20-25% down you end up with a positive cash flow after your payments, taxes, insurance, maintance and vacancies. To many people did not do this and they ended up with properites that did not cover those costs. Of course I have grossly simplified this but that is a starting point.
Web Reference: http://www.troystaten.com
0 votes Thank Flag Link Sun Nov 7, 2010
Step 1: Meet with a financial advisor/planner to get advice on how investing in real estate fits in with your total financial plan, including retirement, taxes, and current income/expenses. Make sure that you are not putting too much of your money into real estate, good planners will tell you to diversify your money for safety.
Step 2: Meet with a real estate broker who works with investors to get an idea of what type of properties you would be interested in and the typical price ranges for those types of properties. Talk about investment strategies and management options most appropriate for your situation. This is just a research step, don't start looking at specific properties yet!
Step 3: If you are not planning to pay cash for the properties you buy, meet with at least 3 different lenders to get a feel for what type of loans are available to you. Assemble a package of basic information that will allow these lenders to get specific in describing what they can offer you. Your goal is to get pre-qualified so that when you put an offer in on a property you have reasonable assurance that (if the property qualifies) you will get approved for the mortgage. Don't expect to get pre-qualified on the first visit to each lender. This is another research step. If you like a lender and their programs, you can come back with your total qualification package later.
Step 4: Get pre-qualified. Go back to the lendors you like, get specific on the numbers, request a pre-qualification letter.
Step 5: Go back to your broker and start the search process.
Have fun!
0 votes Thank Flag Link Sun Nov 7, 2010
Make sure you are very, very familiar with the process for evaluating the investment so you are sure of success as an investor! Know how much of a down payment you are going to need and save, save, save! Educate yourself on alternate sources of funding your investment, including owner financing and hard money loans. Find a source for both conventional and hard money loans and build your relationship with them now! Listen to your lender! They will be an invaluable source of advice. And find yourself an excellent realtor who works with investors, perhaps is an investor themselves, and that can guide you in your purchase. Last, find yourself an excellent attorney with experience in real estate investing.

One thing people, especially some selling "programs' to investors, tend to forget is this, a good realtor is the best resource you will ever have! They have done this before and they know both the correct path and the pitfalls. they know when to exercise caution and when to go full steam ahead. They know the process, they have access to the partners and resources you will need and they know what works and what doesn't in your state. And they have a fiduciary duty to YOU to do what is right for YOU even if it is not in their own best interests (i.e., maximizing their commission). No one other than your attorney has that legal obligation to you, their client. A good realtor is worth their weight in gold!
0 votes Thank Flag Link Sun Nov 7, 2010
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