Buying your first investment property can be scary for a lot of beginners. My honest truth is that it is so worth it to take this first crucial step towards taking control of your financial future. The path for how to buy investment property is not easy but it is simple as long as you are willing to learn and treat it as a business. The questions that come to mind are “what should I buy,” “where should I buy,” “who is going to deal with tenants” etc. The good news is that there are people who can help and guide you through the process.
If I had to summarize my top reason to invest in real estate, it would be CONTROL. You own a hard asset and unlike the stock market that can drop in value tomorrow because of a corporate scandal or a major environmental disaster half way around the world. With real estate, you are in full control of your financial future and the growth of your money.
Here is a great quote by Kevin OLeary: “Here’s how I think of my money – as soldiers – I send them out to war everyday. I want them to take prisoners and come home, so there’s more of them.”
Lets talk about how to buy investment property correctly
STEP 1: Get Educated
Start reading books and listening to audio books on how to buy investment property. I highly recommend Robert Kiyosaki’s series. The right mindset is responsible for greater than 80% of your success in my opinion. If you do not surround yourself with the right information and the right people, you will lose focus and give up very quickly. I highly recommend coming out to our live free class, click here.
STEP 2: Determine Your Financing
You do need money for down payment to invest in real estate, however the money does not have to come from you. You can use someone else’s money, line of credit, friend or family etc. Talk to a mortgage broker to get pre-qualified.
STEP 3: Build a Relationship with an Investment Focussed Realtor
I started off as an investor long before I became a licensed Realtor. It was difficult for me to find the right agent that was an investor as well and someone speaking from experience. The right Realtor should be able to coach and advise you on the best strategy for you. They’ll know the best markets for you and the right type of property, etc.
For a Free Phone Consultation, click here.
STEP 4: Start Looking at Available Properties
Ask your Realtor to show you or send you some properties for you to get familiar with the market and areas, property type etc. You can start to crunch some numbers as far as rental income, expenses incurred, your mortgage payment and cashflow projections.
STEP 5: Do your Due Diligence
Once you have found the right property, always remember that you are responsible for your own due diligence. A great Realtor should be able to guide you through this process however other professionals such as lawyers, accountants, inspectors, mortgage brokers are also key in your due diligence process.
STEP 6: Closing and Getting Your Property Rented
Upon closing on the property, get all repairs and maintenance issues looked at. It is much more difficult to start doing repairs after tenant has moved in. Start advertising the property for rent or use a property manager or leasing service to fill your property. Start cashing cheques!
So until next time, happy Canadian Real Estate Investing.
Jose Jafferji, REIA