Real estate investment is a big step, but it can be rewarding if you go in prepared. For first-time homebuyers, there are some tips to keep in mind to find success.
Do your research. Learn about the neighborhoods and properties you’re interested in to determine if they’re steadily increasing in value. Check crime rates and school rankings as well. Look for an area with a stable job market and amenities like public transit.
Get preapproved for a mortgage. Work with a mortgage lender to determine how much you can borrow so you can shop with confidence. Getting preapproved also shows sellers you’re serious.
Look for the right property. Consider both the current value and the potential long-term value. Look for a place in good condition in an area where values are rising. If it needs minor repairs, make sure the price accounts for that.
Don’t waive the inspection. Even if the place looks great, get a professional inspection. An inspector can spot issues you might miss, like a faulty furnace, leaky roof, or other problems that could cost you down the road.
Negotiate the best deal. Do research to determine a fair offer price based on the property and neighborhood. Don’t get emotional—stick to the facts and numbers. Be willing to walk away if you can’t get a good deal.
Plan to hold the property. For the best return on investment, plan to own the property for at least 5 to 10 years. This allows time for values to rise and for you to build equity. If selling sooner, make sure you can at least break even after fees.
Manage your payments wisely. Get a fixed-rate mortgage so your payments remain stable, and set up automatic payments to avoid late fees. Pay extra when you can to build equity faster.
Keep an emergency fund. Owning a home means you’re responsible for maintenance and repairs. Keep an emergency fund with at least six months of payments in case the furnace, roof, or other critical items need replacement.
Stay on top of maintenance. Perform regular maintenance like cleaning gutters, servicing the HVAC, lawn mowing, etc. This prevents small issues from becoming big, costly problems down the road. Keep your place in good shape to maximize resale value.