Turning over a New Leaf

Ok, so it's a new year and you've decided to turn over a new leaf and take action to invest in real estate. So, where do you begin? 

Before we even think about what investment strategy is right for you, we need to talk about why and what is your goal. 

First, the why. Why have you decided to invest in real estate? Is it because of all the infomercials? Is it because your stock market portfolio is disgusting and not getting any better? Is it because a friend told you that this is the only way to make money in this environment? I cannot answer this question for you, but it is important for you to answer it yourself so that you can understand your motivation as well as to help determine what strategy is right for you. 

Next is to determine your goals. Is your goal to generate additional cash flow, increase your cash reserves, generate enough income to allow you to leave your job, a combination of these, or some other reason(s)? This step is as critical as the first, because it also will help you to decide what strategie(s) to employ.  

The final major items needed are how much capital do you have to invest and how is your credit score. 

Once you have these written down, it is time to find an EXPERIENCED investment agent. Make sure that you take your time in interviewing and researching any agent that you think you want to work with. How many transactions has the agent completed? This is important to know, because they will need experience in guiding you through the process as well as having resources that other agents may not have. Does the agent invest as well? If so, will they be competing against you for properties? If the agent doesn't invest, how can they know the pitfalls and things to keep an eye on. I relate this to a stockbroker that doesn't invest in the stock market. Keep in mind that even if the agent buys the type of properties you are looking to acquire, this is not really a bad thing. The chances are pretty good that they won’t be able to buy all good deals that come along. 

Representation: This is an important area to address. If you want an agent to work for you and give you the best service, don’t be afraid to sign a representation agreement. If you don’t want to get locked into a long-term with an agent that may or may not fit your needs, get them to do a 1 month agreement initially. If after a month you’re happy, then go ahead and sign for a longer period. If you’re still not sure after a month, then sign for another month until you’re either comfortable, or ready to move on to another agent. 

Next post will be reviewing the properties your agent has sent and determining which ones to visit.