10 Steps to Buying Your First Investment Real Estate Home

Successful investors always have a plan. They have a strategy for getting into a property and they will have multiple strategies for getting out of a investment property.

I offer a blueprint to success in real estate investing...

1) Know what is Important to you in your life. I'm not just talking money - life itself has value - what is it that makes you tick. Figure this out and if real estate investing is not for you, then it's not for you.

2) Clean Up Your Act - If you have issues with credit, taxes, ex-spouses - anything that disrupts your life or has the potential to - get it together and deal with it. If your life is over-complicated then you can be certain these negative forces will have a negative impact on your real estate investment strategy.

3) Know what you are doing. Yes, I understand there is nothing like experience to figure things out but for crying out loud have an idea of what you are getting into. If you haven't ready any books on the whole idea of real estate investments, then go to the book store and start reading. Go to seminars and classes - both online and in hotel rooms and the local community college.

Figure out where you want to invest and regularly drive through the area. Find yourself a local REALTOR to work with and get familiar with the local market trends.

4) Have your REALTOR refer you to a lender that can work with you in your situation. Will you be using conventional financing? How about Hard Money? Maybe you have your own cash to spend. In an event every type of financing available is as different as every home that you will look at. So, start to build your Personal Real Estate Investment Team now so you have the resources ready to roll when your first golden opportunity presents itself.

5) Find the right deal. With the help of your local area expert REALTOR, you should be able to find a bank owned REO home priced 10%, 20% or even 30% or more below other homes in the neighborhood. Make certain that you don't get over excited and fall in love with the first house you find. Remember, you are an investor now and this is business. Save the emotion when you buy your wife the big house on the hill with the pool and view that you always wanted...let me repeat myself...THIS IS BUSINESS.

So, first, once you have determined that the money and value is in the right range you'll want to inspect the property. Don't start getting cheap on me here. Do yourself and everyone else a huge favor and hire either a general contractor or a real estate inspection company to go through the entire home with you. Don't do it yourself, please. I don't care what you know - the idea is to have an OBJECTIVE set of eyes on the property.

Next, you are going to have to figure out an ESTIMATED repair cost. Break each project down to individual projects. Estimate time and materials as well as an allowance for overages. Do this for the interior and exterior.

Finally, look at all the numbers and complete your due diligence to make sure this home will meet your goals.

6) Have your REALTOR write the contract and present the offer. Again, know your limits and don't spend any more than you have allocated - knowing that there are still some hefty expenses to be paid, if you are fortunate enough to close escrow.

7) Now that escrow has closed - get to work. You should have set side the time to take care of all the work that needs to be done. If this is going to be a series of weekend projects, then you better have some hefty reserves to cover the several mortgage payments you'll be covering while strolling through the repair process and getting the place either rented or sold -depending on your strategy.

No one can expect you to do all the work yourself - but do as much as you possibly can. Don't be afraid to learn as you go on some of the basic projects and repairs. On the other hand, there is nothing embarrassing about hiring a professional to do a professional job.

8) Marketing begins the day you own your investment property. Start with a "For Rent" sing in the yard. As the home gets closer to rentable condition, start with other forms of marketing including classified ads and places on the Internet, like Craig's List..

As you begin the interview process, you'll need an application as well as either a rental agreement or a lease - choice is yours. Ask lots of questions, like, "Why are they moving?" and "How many people will be in the home?" Be careful of your questions - if you ask about kids and spouses you might not like what you hear and you can end up discriminating and explaining your decision to a judge.

Make sure you thoroughly investigate all references - including former landlords and employment. It is too easy these days for renters to fake this type of information, with all of the cell numbers and VOIP (Internet phones) that are easy to access. I find the best way to check anyone out is to Google them - especially if they are a credible reference.

A term you may want to consider is paying for the water and a gardener to keep the place looking good. Factor the cost into the rent, but this way you have eyes on the property every week. If you, as the landlord were to show up that often you would be perceived as a stalker and a nuisance and most judges would love to slap you around for these infringements on the civil liberties of your tenant...so send the gardener instead.

Then you just have to do your paperwork and collect your money.

9) Talking about money, I recommend a separate bank account for each investment property. This may be pre-mature, but consider a separate LLC for each property as well. All of your communication should be separate from your personal life. Use a PO Box and a cell phone.

It is very important that you keep good records of both the financial aspect of the real estate investment as well as any and all conversations you have with your new tenant.

10) Figure out what you did right and what went wrong. Learn form it and grow with the experience and lets go do it all over again.