Document a process to acquire an investment property

Repeatable, simple and profitable…

This is a personal favorite of ours. It has supplemented income and provided a great boost in wealth and has given the ability to purchase other properties.

The most important thing you can do as as retail investor is to document a process to acquire an investment property.

After honing down a process, the biggest issues are competing with deals in “hot markets” the way 2020-2021 has shown to be.

For the retail investment property investor, there are many different ways to go about looking for a property to invest in.

For the sake of this process (and in the current real estate market), we will look at the following scenario

  • You own a primary residence and will only look at a single or multi-family a a pure investment
  • You are looking geographically close to you
  • You are looking at areas that are A or B rated properties
  • This is your first or second investment property
  • You plan to put 15%-25% down or all cash depending on the property (it will be very difficult to navigate around this in a competitive market)

We put together a simple real estate investment process for those that are starting out. We recommend knowing and educating yourself on the process and industry lingo before committing.

Owning real estate has provided us a cushion for the unpredictable.Has it come with challenges… Sure it has. They are all worth it in the end if done right.

Discuss it with a significant other if applicable

The last thing you want introduced into your relationship is a potentially stress inducing investment. There will be things that happen that may or may not be in your control.

Here is a real life story that happened to us:

We purchased our first home as a primary/investment home duplex that we lived in and planned to hold on to after we had moved out.

It was our first time managing tenants and a property. We did what we could to prepare for such a process.

  • We cleaned, painted and even replaced some appliances
  • Took professional photos (do them right the first time and you can just re-use them for future listings)
  • Posted the listings on various sites such as Apartments.com and Craigslist
  • Bulk showed the apartment and handed out applications (we used hard copies at first but quickly moved to digital shortly thereafter)

We had some great candidate for the unit…

Or so it seemed

We interviewed and checked references on 3 potentially great candidates and then offered the unit to 1 individual that had “great” references.

Individual paid on time, kept the unit clean and was quiet until a year and a half later.

We are still unsure to this day what triggered this individual to act the way they did but they completely flew off the hinges.

Fueled by alcohol every weekend (and some odd weekdays), a piano that would travel easily through floors that was played at the wee hours of the morning and some digital/verbally odd language made the rest of the year a very stressful one for myself and my significant other.

Bad tenant can stress a relationship out

The frustration of this individual spilled over into our relationship which became a very frustrating ordeal and questioned our decision on owning real estate.

After re-checking his references and cross referencing them with public records, we came to find out that the individual lied with the references.

Moral of the story: Trust but verify and listen to your gut if you don’t feel that is something right.

Interview Real Estate Agents

We preferred to find someone that has cut out a niche for themselves with these types of properties. Chances area they know the markets well enough to help inform you on:

  • Deals coming to market
  • How rents are stacked up and if there is room for improvement
  • If there is opportunity to increase the value of the property through capital improvements
  • How well the area is forecasted to grow population wise

We went with someone that was 4 years into their practice as they were still hungry enough to search and help bring prospective deals to us for review.

Hammer out financing terms and sources

We wanted to get this lined up and out of the way early on so we knew what we could afford to purchase and we could run numbers more accurately in our analysis.

Know the numbers before committing

Costs for a loan do add up! Make sure you know what these numbers will look like prior to making an offer.

Account for vacancies/late and non-payments as well. The calculator we linked to above will help ensure you are not investing in a losing venture.

Automate deal flow and opportunities

Ask your agent to put you on the MLS with a set criteria of:

  • Price
  • Location
  • Single/Multifamily or both

You will receive a constant flow of listings and hopefully see something worthy of looking at.

Set up other real estate sites

Here is a small list of others sites you should use to create a flow of new investment properties:

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