Five Questions To Ask Before You Invest In Real Estate Article

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Five Questions To Ask Before You Invest In Real Estate

Deciding to invest in real estate is one of the best decisions you will ever make for your future. However, it isn't something you can decide to do one day and then rush out and do the next. There is a process that you have to learn and lots of information to digest. If you think you have done that already and you are now prepared to go out and make your first purchase, here are five questions to ask that will help you to prepare.

Author: Alexandria Anderson

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Deciding to buy investment property is one of the best decisions you will ever make for yourself. However, it isn't something you can decide to do one day and then rush out and do the next. There is a process that you have to learn and lots of information to digest. If you think you have done that already and you are now prepared to go out and make your first purchase, here are five questions to ask that will help you to prepare.

What type of property am I interested in? Are you interested in a duplex, multi-unit complex, or perhaps just a single family home? Are you interested in commercial real estate? What about undeveloped land? How you answer this question will determine other things that you do later, such as how you decide to actually pay for the property. It is also best to choose one direction to pursue so you don't go on wild goose chases and so your team knows what they should be helping you with.

What area am I interested in? Do you want to invest in the city where you live? If not, what part of the country do you want to invest in? The Internet is your best tool for determining what area of the country you would like to put your time and resources into. Ken McElroy, author of “The ABCs of Real Estate Investing,” calls this Level I research. Later, once you have decided on a part of the country and a city in which to look, you will need to decide on a neighborhood. You will find that during McElroy's Level II and Level III research.

Do I have a plan to pay for it? The type of investment property you are looking for (as well as your own assets) will determine how you can buy the investment. If it is a smaller investment such as a house, you may want to pay for it outright. However, even if you don't have the finanacing in place, if it is a investment property that has generated cash flow in the past, the bank will probably give you the finacing you need. They know that they will make money on the deal regardless of what happens to your investment. If you are looking at a large property that you can't afford outright, you will probably be able to find other investors to partner with you.

Is my team in place? You can't do this successfully without a team. This is simply because there is so much work, and so many different types of expertise needed, that you simply can't do it all by yourself. There is not enough time for you to become proficient enough with real estate law and accounting, plus broker your own deals and manage your own properties. It is necessary to delegate. That is why McElroy says you start with a lawyer, an accountant, a broker and a property manager. After that, you may also need appraisers, tax consultants, a surveyor, a structural engineer, an architect, an estate planner and more.

What is your repair budget? This is essential. Knowing this will help you determine what areas to look around in because some areas may be full of old buildings or some newer buildings may actually be in need of a lot of upgrades. You will want to what you are getting yourself into and whether you can afford it.

This isn't a a complete list of questions. Once you embark on your real estate investing adventure, you will find a consitent list that you will need to pay attention to. But these will get you going on the road to asking yourself the best questions. Sometimes asking the appropriate questions is more important than the answers themselves.

About Author

Alex Anderson is a Minnesota Investment Property specialist. For more information on Minnesota Investment Properties visit her website at http://minnesota.greatinvestmentproperty.com .

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