Buy Your First Investment Property the Right Way

By Andrea Needham

Becoming a real estate investor doesn’t have to be as difficult, but purchasing a home or commercial space to use as an investment property is a big step. And it all starts when you buy your first property. You can be successful if you do market research, follow guidelines, make your property attractive to tenants, and partner with real estate professionals who can guide you every step of the way

The Buying Process

The buying process begins with finding a property that’s profitable (your agent will help you determine your best options) then submitting a strong offer. Your agent will also walk you through everything from permits on the property, inspections and negotiating to final terms of the sale and the closing. 

Making Improvements

Improving the property you purchase will increase its future  value in the area and if it’s a rental property, will make it more attractive to tenants. For instance, you could freshen the paint, change the appliances, or update the fireplace. You could also make larger renovations – like a brand-new kitchen or expanding the living room – that will typically generate larger returns. 

How an Agent Can Help

A real estate professional will guide you through the property search process and represent you in dealings with sellers to protect your interests. Unless you’re highly experienced with real estate already, it’s always important to work with a real estate agent and rely on their experience and advice. . Many real estate agents can also refer you to property management services if you’re planning on renting out your new home.

Decide How to Manage the Property

While managing an investment property gives you deeper insight and more direct control, it comes with consistent responsibility and time sacrifice. FortuneBuilders points out that using a company to manage your investment means you’ll have to pay a percentage of your profits to a third party, but you’ll also spend less time on the property and have a dedicated professional handling maintenance, upkeep, and any tenant issues that may arise.

A Home Warranty Can Save You a Lot

A home warranty can offer protection in case your appliances or utility systems malfunction and need to be repaired or replaced in one of your tenant-occupied properties. Before purchasing a home warranty, check the home inspection report to help identify any possible issues, and determine if there are any warranties currently in effect. You should compare home warranty coverages and terms before deciding.

Protect Yourself Through an LLC

Forming a limited liability company or LLC can protect you from a certain level of financial liability if your company goes into debt or faces lawsuits. Using an LLC to conduct your real estate investment business is also ideal because you can deduct business expenses when filing taxes. If you’re unsure about creating the LLC yourself, you can hire a lawyer to do it or pay a registered agent to help you with the paperwork. (As always, consult with a legal professional to determine the best next steps for you.) 

Real Estate Is a Great Place to Start

Investing in real estate can be rewarding if you know what you’re doing. Make sure you work with a trusted, experienced real estate professional who can make the process not only financially beneficial but also fun!