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Retire Young with Real Estate Step-by-step plan to buy your first home
Asides from the luxury of being a home owner - that feeling of being at "home sweet home" - there are many benefits to buying real estate. The earlier you are when you buy real estate they bigger advantages you may experience.
For young real estate investors, you need never worry about your rent increasing again, or about being asked to move out. You are the one in control, so you call the shots. Yes, you're the boss.
Furthermore, real estate is one of the smartest investments out there. With the high demand for homes, it's no wonder that real estate is credited with creating seven out of every ten millionaires!
Still not convinced? Consider these other fine benefits to buying properties when your young:
If you purchase a $200,000 house, for example, and it appreciates 10%, your house value is now $220,000! And if it appreciates 10% again the next year, the value grows to $242,000. This is how millionaire dreams are made!
With real estate, that $10,000 investment would control a $100,000 property. With the same 15% appreciation rate you would have earned $15,000 the first year, which is equal to a return on investment (ROI) of 150%. Sales costs are higher for real estate than for stocks, but if you can get this kind of return (and I'll show you how), over time your real estate investments should offer you excellent returns.
Getting Real in Real Estate - Climbing the Property Ladder Let's look at your real estate goals and see how buying a home fits in with your overall financial plan. Ask yourself: What am I trying to achieve in buying a home or a rental property?
Are you looking to get the most appreciation possible, or a monthly cash flow, or would you just like to find a home that is located in a fun area of town?
Where should I buy? Think realistically, and look at the location in relation to your distance from work, and distance from friends and family. What is your lifestyle? Does it fit with the home's area? For instance, do you want to be nearer schools and parks, or nearer to bars and restaurants?
It's important that you carefully research the area where you want to live - this makes a big difference in the value of the home from a financial and personal standpoint.
Also, it's vital that you get an understanding of the market where you are planning on buying. Do you see a lot of homes for sale in that area? Are homes in good shape, or do some look rundown? Is there a busy road or train tracks that you know you would not want to live by? Drive the area street by street, and have a walk around on foot - do you feel safe?
There are a lot of questions to answer, but once you've considered them, you are on the right track to making a smart, informed decision - and hopefully a better decision - about where you want to buy and live.
Real estate agents When you're ready to proceed to the next step, you need to find a successful real estate agent that has time to dedicate to the purchase or sale of your property. An agent can help search for properties, provide advice, and guide you through the legalities of the paperwork.
For your first purchase, find agents that specialize in the areas and homes you're interested in buying or selling by picking up local papers and fliers.
Above all, find an agent you feel comfortable with, and ask a lot of questions. For example, you could ask:
Choosing the right real estate agent will make a big difference when buying your property. Good real estate agents are real estate specialists that know how to complete a transaction, and are familiar with the dynamics of the market. They are a valuable tool and can provide you with excellent insight into the area.
Real estate agents are typically compensated by the seller, who pays approximately 5% to 6% of the sales price (3% to your agent and 3% to the buyer's agent). The buyer does not pay for their service.
Once you locate a real estate agent that you want to work with, he or she will have their lender pre-qualify you for a loan. However, you don't have to use the lender the real estate agent sets you up with. We'll discuss choosing the right loan and lender in the pages ahead.
Now I've got a real estate agent; what next?! Look, Like, Lock.... Look The search is on! Real estate agents will help you search through the properties, and they can send you emails of home listings as they come available, and even drive you to view the properties you're interested in.
Like Take good notes at each property - what do you like, what don't you like - make sure to view many properties before settling on "the one"! This way you can fine-tune your needs and wants list. For memory purposes, it really helps to snap a shot with your camera phone and note which property it is.
Lock Once you find a home that you like - okay, that you love - then the real estate agent will help you to form an offer. At this time you will be signing a purchase contract and a small deposit will be due. They typically require cashiers' checks, which you can get at your local bank. Although real estate agents have a responsibility to protect your interest, they only get paid for a closed sale.
Whenever you make an offer, the real estate agent and you should build in several ways for you to exit the contract without losing your deposit. These are often called weasel clauses but they will keep you in the best negotiation position throughout the contract.
A good real estate agent will typically take care of most of these for you; however, always remember that your real estate agent is going to make money from your purchase. Although they are supposed to have your best interest in mind, a large paycheck for them is dangling like a carrot on a string if you purchase the home.
Like everything concerning financial matters, look after yourself all of the time, and aim to gain knowledge from every transaction you participate in as a savvy investor. Learn real estate, start investing young and you'll find yourself sitting on a pile of equity sooner than you think.
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