If you've never bought a house before, you might find it hard to get started. Here's a complete plan.
on August 25, 2021, Samuel Leeds
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You've found a great deal on a house, and you're thinking, "Great. What are the pros and cons of buying it? You probably found the property through the website of a real estate agent or property platform. You have already seen the house. You've done the math and know what the ROI is (ROI). You've done what I told you to do, which was to "Buy cheap, rent for a lot, and have a property manager close by."
To buy your first investment property, all you need is a step-by-step guide. All done.
1: Get help from a mortgage broker.
You will need to make a "decision in principle" (DIP). This shows you how much a lender is willing to give you. It's not an offer of credit because it can't be given without first doing a lot of checks. It is important to get a DIP because you will need one when an estate agency accepts your offer.
If you buy a property to rent it out, you will have to show less proof of income than if you were buying a home for yourself. As you rent out the property, it should be able to pay for itself. Lenders often care more about how much money the property brings in than how much money you bring in. You'll need a mortgage broker who isn't tied to any one lender and can shop around for you among all of them. This is because many high-street banks will continue to have strict limits on how much you can earn.
Asking other real estate investors for recommendations can help you find independent mortgage brokers you can trust. If you don't know any, you can look on Facebook for real estate investment groups. You should be able to get a decision in principle by calling a reputable mortgage broker and talking to them for no more than 15 minutes.
2. Talk to a lawyer.
Now you need a lawyer. You should also ask for recommendations, because I've found that most solicitors are either very slow or don't do anything at all. Don't let this stop you after that. Choose a lawyer who is "good enough" so you can talk to the real estate agent after your offer is accepted. Don't worry too much about this phase. You don't have to keep the same lawyer forever.
Keep a good lawyer once you've found one. The individual looks like gold dust. Pay your lawyer well for their work, and treat them with respect.
3. Suggest something
Before you make an offer, you should find out what the other side is willing to take. It can be hard to talk to a real estate agent about this because they'll tell you they'll just send your offer to the seller. This is true, but a real estate agent usually has a good idea of what the seller would be willing to do. You could start by saying something like, "I'm interested. I like living there. I don't want to make a sneaky offer, but as an investor, I'd like to get a little bit of a discount. What could they decide on?
The real estate agent may sometimes tell you what kind of offer might be accepted, or he or she may just tell you to make an offer. If the real estate agent can't give you a range, offer a price that will make you look bad. Remember that you're trying to buy an investment property, not your future home, so it's okay if someone else makes a better offer.
4. Fill out the paperwork
As soon as the offer is accepted, five things must be given to the real estate agent. These things should be done ahead of time:
1. A photo on your driver's licence or passport.
2. Proof of address (for example, a council-tax bill, maybe a utility bill or a bank statement that shows your address in the last three months).
3. Your proof of money. This is the amount of the deposit. There is a picture of your bank account. It must have your name and a number that is equal to or more than the required deposit.
4. An agreement in principle from a mortgage broker
5. Specifics about your lawyer.
5. Wait
Once you give those to the real estate agency, they will take the house off the market. The estate agent will talk to your mortgage broker and lawyer instead of you. You should check in every two weeks or so to see if there is anything you can do to speed up the process. Even if you think they're not moving fast enough, you should still be kind and helpful.
When they give you the ball and tell you to do something, move quickly. You have to be patient while the game is going your way. If you don't always act like a professional and aren't patient, kind, and pleasant, you won't be able to build long-lasting business relationships.
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