Many people who plan to purchase properties are concerned about risks involved. For these people, buying a property is probably their biggest investment in life and they are afraid that things can go horribly wrong. For this reason, it is important to arm ourselves with basic knowledge of things that need to look out and avoid before making a purchase.
1. Define our budget and how much we can really afford to invest: Beginners often don't have a clue on costs that they need deal with when purchasing a property. Things can be different from state to state – or – from country to country. Common expenses that we need to be prepared with are agent fees, stamping fees, loan agreement fees, legal fees and others. Some properties also need to be repaired or upgraded before placed in the market.
2. Plan an exit strategy: Investors should know what they want out of any property that they plan to buy. Those who plan to flip houses should have an ability to find good properties that are sold below the market value. It is also important that the property won't need any kind of major repair. We should know more about the rental market, if we plan to buy the home for rental. We should also make plans on what to do if we can't rent the property out in 3 months or more. We should be safe when we are clear with our objectives and prepared if we fail to achieve them.
3. Inspect the property properly: We should always inspect the property carefully before making a purchase. Ask an opinion from a friend or professional about the condition of the property. It is a good idea to make a list of things that we need to check when we inspecting the house. We should be able to get better investment options by being more careful. New investors may find it hard to make accurate assessment of a property in the beginning, but they should become better as they learn more.
4. Know latest market trends: We should know about the market price and specific demands in the area. Consumers could be looking for properties with a lawn that are valued less than $250,000 on average. The more we know about specific demands in the local market, the more likely we are able to invest on properties. Local bankers could also help us with valuation of properties in the area.
5. Make written document of everything: Verbal agreements won't work and we can have much smoother investing process by making everything well documented. It is a good idea to ask a lawyer or property agent to help us with this.