Thinking of buying a property this year? Whether you’re a real estate investor or purchasing your first home, put these real estate resolutions at the top of your list.
I Will Get Pre-Approved Before I Start Looking at Properties
One of the most important elements in the process of purchasing a property is getting pre-approved by your bank or mortgage company so you know exactly what costs you can carry and how high you can go in your offer. Too many people start looking at properties before they know exactly what they can manage, which often leads to either disappointment or spending more than they can afford.
I Will Create a Budget and Stick to It
Budgets exist for a reason. Remember that your mortgage pre-approval is the maximum amount the lender is willing to loan, but that doesn’t mean you should go that high. Look at how your mortgage payments will fit in with the rest of your finances and create a budget based on that. A high pre-approval amount shouldn’t change it.
I Will Create a Proper Business Model
Real estate investing is like any other business and in order to make it successful, you need to go beyond just planning a budget and create a proper business model. Look beyond the basic costs and ask yourself some questions.
- What’s the purpose of your investment?
- What are some of the challenges you could face?
- What are the upfront costs? What is your source of funds?
- What are the fixed monthly/yearly costs?
- What are some variable costs? For instance, what about interest rates? If they change, how will you deal with it?
- What are some potential problems that could derail your plans and how could you avoid and/or fix them?
You’ll never be able to answer every question, but a proper business model complete with contingency plans will go a long way towards determining your success as a real estate investor.
I Will Not Get Caught in a Bidding War
In today’s market bidding wars are common, but purchasing a property is not a competition. If you pay too much for a property you end up losing in the long run. Never let your emotions get in the way of making smart financial decisions. Being a successful real estate investor means making intelligent, emotion-free decisions right from the get-go.
I Will Listen to My Gut
Purchasing a property is a big investment and chances are you will have a lot of people trying to give you their two cents. Advice is great, but don’t let anyone talk you into a purchase you’re not ready for. This goes for friends, family and real estate agents. Remember that even though your agent is on your side, it’s still his or her job to sell you a property. If you’re not sure, don’t sign.
There’s one more thing I need to add, and that is to always work with a Trusted Agent or REALTOR® who can guide you through the process. Real estate agents are familiar with all of the contract details, clauses that can be included, the trends in the market, and so on. The money you might save on a commission could be peanuts compared to what a good REALTOR® can negotiate for you. When you’re dealing in real estate you’re dealing with big money, and you should be using the best tools you have available. A good REALTOR® should always be a part of your team.
Remember, anyone can become a real estate investor, but the difference between failure and success is smart decision-making. Get educated, get informed, and take control of your financial future.