There is a lot of misinformation out there when it comes to buying a property such as a house or condo. A lot of people say it is about location, or about how well kept the property is, or how old it is. While all of these things are good indicators, the individuals or companies making these suggestions are flat out wrong. A lot of the time when a real estate agent, or company gives you advice about home buying, they are flat out telling you only things that will lead to their benefit. Due to these issues, you must really be careful who you listen to, and what you listen to (tv, radio, etc).
I am going to go straight to the point here, so you know exactly what you need to do to get a great property, and avoid all the bs out there.
A) Educate Yourself
The most important step in the process is that you are knowledgeable about the home buying process. Go pick up a few books, or ebooks on the subject from Amazon, read them. Make sure you understand appraisals, inspections, property taxes, and your mortgage payments.
B) Choose the Right Real Estate Agent
The right real estate agent will have your interests in mind, and will actually care to work. The biggest problem I noticed with the majority of real estate agents is that they did not want to work very hard. This led to situation after situation where no progress was made because they were not persistent enough to make things happen. If an agent seems disinterested, or like they don’t want to work very hard, get rid of them immediately.
C) Know What To Avoid
Avoid everything listed below like the plague:
- All short sales – This is so much headache and risk that it outweighs any potential benefit of doing a short sale. It is best spending your time elsewhere in more lucrative areas.
- Foreclosures – This is the same as with shortsales, too much rish and headache to make it worth it. Spend your time elsewhere.
- Areas with high crime rates – This indicates your property value could go down big time. Look elsewhere. If you don’t have much money and this is all you can afford, look outside of your city (perhaps a short distance away from major metropolitan areas, where housing costs are the same as inner city high crime rate areas, but you avoid the crime.) Also, if you have children, this is a huge no. Raising your children around high crime areas can lead to your child getting involved with gangs or drugs.
- So called “special deals” – Nothing is a special deal, except maybe the deal leading to a special commission for the real estate agent. Avoid these deals at all costs.
- Damaged properties with a lot of unknowns – Purchasing a property that has a lot of unknowns and damages is a really bad idea. This is like gambling, yes, perhaps you can remodel it, and make it look great, but you could also be in for some extremely heavy costs. These costs could far outweight, double, tripple, or even quadruple what your original estimations are if something unexpected is found which usually happens.
D) Knowing What To Look For
This isn’t very hard, I will make it simple for you.
- High Square Footage – It might be nice, but if there isn’t much space, it is going to be a problem for everyone living in the house. Additionally, you might not have enough room to put all your stuff.
- Number of Bedrooms and Bathrooms – Don’t make the mistake of purchasing a really expensive one bedroom. These properties have horrible resale value. Also, don’t make the mistake of buying a 3 bedroom place with 1 bathroom. This not only is a huge inconvenience, but makes renting out the place really difficult.
- Size of the Bedrooms – Don’t fall into the trap of buying a three bedroom place that has 2 bedrooms the size of closets. Renting this out is going to be really hard, or you will at most get much less than a similar place with larger bedrooms.
- Look at Rental/Mortgage Ratio – You want this ratio to be one or greater, the higher the better. You never know what is going to happen down the road, and it would be really great if you could move somewhere else, buy another property, and keep your property, renting it out, and still paying for your mortgage.
The number one source of wealth in the US and a lot of other places in the world is property ownership. Buy a property, hold on for 20 or 30 years, and have a net worth in the hundreds of thousands, or even in the millions. It is very hard to reach this level of wealth any other way. Ensuring you follow the right steps when purchasing a property will help you own a property for a long period of time and rent it out for a high rate if you need to.