If you’re a first time real estate investor who is eager to purchase a house or condo, there are some steps that you’ll need to take prior to seeking the ideal property – and the majority of them are financial related. Finding funding as a first time investor is most likely your initial step to being a property owner.
Certainly, one important piece of information that you will need to know is the approximate selling prices of comparable homes in your desired location. So, if you are house hunting in Orlando, then, you may want to check the recent sale prices of homes for sale not only in the immediate Orlando demographic, but also in the outlying area.
You will also need to see how much property you can afford. Depending on available financing and mortgage interest rates, you should determine what the total amount of your monthly expenses would be – including the cost of property taxes and homeowners insurance. Once you have factored in all of your housing expenses, you need to ensure that you will be able to afford the payment – even if the property sits empty for a period of time. Otherwise the payment could become a struggle.
In addition, when purchasing an investment property, you will also have to factor in additional expenses for your closing costs. These can include the lender’s origination fees, settlement and title fees, and other prepaid items. On average, closing costs will typically be in the range of between 2 and 4 percent of the total purchase price of the home.
When seeking out the funding for your real estate purchase, there are a couple of ways that you can go. In some cases, a bank or other type of “traditional” lender could be your best option. In other instances, a hard money lender or a private lender may be your better alternative. This is because they will oftentimes be more concerned with the potential of the property itself, rather than your personal income and credit situation.
For more information, give us a call. We can provide you with additional details on the ins and outs of owning investment property. We can also help you with reducing the time and headaches of locating tenants and managing the property once you’ve made your purchase, allowing you even more benefit from your investment.
