3 Important Things to Consider Before Buying Your First Property

January 28, 2015

As a new real estate investor, nothing is more nerve racking than buying your first property. It’s taking that first big step down a new and exciting career path. I can tell you that once you get your first deal, you’ll only want to get more. However, before getting that deal, there are three major things to consider.

These three factors are a very important part of planning what exactly you are going to do after buying your first property, and require careful consideration.

1. What is your end goal?

Having a plan and goals are as important when buying your first property as it is for every property after that. However, the process when buying your first property sets the bar for all the ones that come after.

Ask yourself “what do I want to accomplish“. Is there a certain amount of profit you want to make? Is there a specific date that you want your repairs to be done by? Maybe you just want everything to go smooth.

Don’t worry about what the “latest and greatest” method or strategy is. Do your homework and figure out what goals fit your business model. Whatever goal you set now will help you how to deal with similar situations in the future.

Without having any kind of end goal, you can’t put together the steps to achieve one. Creating an end goal lays the foundation for everything that comes after, like creating a strategy and putting your team together.

• Set an end goal
• Don’t worry about the latest and greatest
• Use your goal to develop steps to achieve that goal

2. Know your exit strategy!

Before buying your first property, you need to have a goal in mind for the property. Before you make the offer, you need to set an expectation. Know your exit strategy! What do I mean by exit strategy?

If you are going to take the time to repair the house and sell it after, your exit strategy is to flip and sell the house. If you are going to turn a quick profit on the house then don’t plan on any repairs, plan on wholesaling. Flipping and wholesaling would be your exit strategies. Both require different pricing and planning, but both are examples of exit strategies.

In addition to a main strategy you’ll want a “ripcord” strategy. You’re buying your first property! It’s worth having an extra strategy. If your main strategy is to flip a house and sell it, and your house doesn’t sell, consider selling it at a deep discount your emergency strategy. Let’s say you want to fix your new property and rent it. Your “ripcord” strategy should be to sell it and move on to the next deal.

Limit yourself to only two strategies and exhaust every option to make those strategies work. The more emergency plans you have in place, the more indecision effects the amount of profit you will make. Keep your plan simple.

• Have an exit strategy
• Limit yourself to one emergency strategy
• Keep your plan simple and stick to it

3. Have your team in place

Every real estate investor wants to be the best at what they do. From buying your first property to buying your 100th property, the goal should always be to get better and improve on what you do.

Working in the real estate business is both an individual and a team sport. You, as a new real estate investor, have done a great job of finding a deal, analyzing it, and are ready to make an offer. However, the work you do with that house will only be as good as your team.

Before buying your first property, you need to have your “A and B” teams identified. Just like any sports team, your team needs a starting roster and backups. You never know when something unexpected might come up and you’ll need somebody to step up. From contractors to closers, always have a backup.

Real estate is a relationship business. From buying your first property to closing your last, you’ll be building relationships, ending relationships, and constantly “rotating players” to evolve and grow your business. Always make sure that your team is solid and that it has depth.

• Have your team and back up team identified
• Always maintain the same expectations with both teams
• Build great professional relationships

There won’t be any other deal like your first deal. It’s no secret that it will be exciting. Buying your first property only happens once! Make sure that it goes smooth. Have a goal, know your exit strategies, and have your team in place. Follow those three guidelines and you’ll be on your way to a successful first deal!

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