My grandmother was kind of a bombshell, back in the day. With her ice-cream-parlor chic and her Rosie-the-Riveter confidence, she was never at a loss for “beaus” – and she had a famously long list of broken-off engagements. Her doing, not theirs. Hey, she was picky. Until she met my grandfather and finally settled down at the ripe old age of 26. She had an oft-repeated saying about this decision. It was, “I should’ve turned down one more!”
Okay, so Grandpa wasn’t perfect. But there was one thing even my grandmother had to admit he did well. (No, not that. Get your minds out of the gutter, people.)
He knew how to invest in a good piece of real estate.
[Half-Priced] Diamonds are a Girl’s Best Friend: It’s your first investment property, so you figure that you’ll buy it like you’d buy anything else – just mosey on over to the listings and pay the man what the place is worth, right? Nope. What a lot of first-timers fail to realize is that digging up a good investment property is like shopping at a flea market: you have to push through a lot of undesirables before you find that perfect deal lying at the bottom of some forgotten bin. As an investor, you’re looking for something that’s selling for 70% of market value or less – most likely a distressed property that you can fix up and turn for a hefty profit later. Keep the hammer handy.
Play It Cool: You’re combing through listings when suddenly you see it: The One. Sparks fly, hearts go a-fluttering, and oh, how it calls to you. Is this the sound of heavenly angels smiling on your decision? Actually, it’s more like a chorus of warning bells. Don’t forget that you’re dealing with an investment here, and that where investments are concerned, it’s usually a bad idea to let your heart run away with your head. Do all the research, and let the facts make your decision for you, in the end.
You’d Better Shop Around: Yes, you want a property that’s selling at 70% or less of market value. No, you do not want that property if it is located at the heart of Graffiti Central. Painting the house once is more than enough; you don’t need help from the local artists. And odds are that spray paint isn’t the worst of what’s going on down there. Owning a nice property in a not-nice place defeats the point of snagging a good deal, because no one will want to take it off your hands later. Bottom line: always research your location thoroughly before you buy.
Get the Scoop: You’ve never done this before, and that makes it okay to ask for help. Actually, it makes it a great idea to ask for help. Heck, even if you have done it before, getting a second (and third, and tenth) opinion on buying an investment property is never, ever a bad thing. It’s like having too many winning lottery tickets. Is too much advice from your elders-and-wisers possible? Not really. So start channeling your inner sponge, and soak up all the good advice that comes your way.
What should you take away from all this? Lots of things. For starters: take your time, take notes, and take stock before you take the plunge. Why?
Because the last thing you want is to find yourself standing on the sidewalk out in front of a dud property, wailing, “I should’ve turned down one more!”