If you read part one, we broke down how to build a Real Estate portfolio. Now we are going to teach you how to find that first house or investment property. You need to understand that it’s not going to be easy; it could take months before you find the house that is right for you. It could take 100s of houses, open days, hours in the real estate office trying to make deals and getting rejected so it’s not for the faint-hearted or someone who can’t take the possibility and reality that they will get rejected.
The very simple way to find your first property is from reading a book called “From 0 to 130 Properties in 3.5 years” by Steve McKnight. He called it the 11-second solution and I found it pretty easy follow-
Step 1: Ascertain the likely weekly rent
Step 2: Divide the likely weekly rent by two
Step 3: Multiply the results by $1,000
Step 4: Compare the results to the asking pricing
If you find that results of these steps come out to be lower then the asking price, then it’s a good investment at face value. Delve a little deeper and research into the house (of course) because you can’t just buy a house off that of face value. But, nevertheless, it’s a great starting point and helps to cross 80% of property you have listed.
Now that you have narrowed down your search I would advise you to go and have a look at the property to get a feel for what your investment might look like. Take a friend or a builder with you and look at everything, check out the walls, the flooring – the whole structure of the house, and take a checklist with you and use it.
Keep it in mind that the Real Estate just wants to sell the house, and they really don’t care about the condition. So make sure you ask valid, in-depth questions and not just how old the house is. Questions like the what is the condition of the roof, plumbing, floorboards… you don’t want to get caught out and make a bad investment because you didn’t ask the right questions.
So, now that you have looked the house, you have to go for a walk around the neighbourhood; talk to the little community, get to know them, ask them if they know why the house is up for sale, and if there are any, they might point out some bad eggs that live nearby. Get to know the area which you are wanting to buy in, after all, if you want to rent out the property you want your tenants to be happy and stay a long period of time. This saves any trouble with people wanting to leave and reduces the stress or worry about the property being vacant for a long time making you lose your income.
You are now ready to buy your first investment property. The thing is, you can make any improvement to the house and increase the rental prices before you lease it out.
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