Congratulations on taking the first step towards owning your own home! Buying a property is a huge milestone, but it’s not the happily ever after that some people think. This is especially true if you plan to generate income from it. Do you want to let property managers handle it for you, or do you want to DIY?
How about repairs? Are you ready to tackle them yourself or would you rather hire a professional? Are you confident about your ability to find the best mortgage rates?
Buying your first property involves a lot of moving parts, and it can definitely feel overwhelming.
Rest assured, all the work you put in will be worth it in the end once you get the keys and start receiving rent payments.
But before that can happen, it’s important to get acquainted with the basics of buying property:
The Cost of Homeownership Goes Beyond the Mortgage Payment
When you’re buying your very first property, the mortgage payment is usually the first thing that comes to mind. But there are other costs associated with homeownership that you need to factor in. These include things like property taxes, insurance, and repairs.
For instance, if your property is in need of major repairs, you’ll either have to pay for them out of pocket or take out a loan. And if you’re not handy yourself, you’ll probably have to hire a professional to do the work for you.
You should also factor in the cost of utilities, as these can vary depending on the size of your home and whether or not it’s energy-efficient. All of these costs add up, so be sure to budget accordingly.
Want to reduce the hassle? Be thorough while researching your options. Hire a professional home inspector to check for any potential problems, and make sure you’re getting homeowners insurance that covers repair costs.
Location Can Make or Break Your Investment
The old real estate adage is true: location is everything. When you’re buying an investment property, you need to be extra mindful of where it’s located.
Ideally, you want to buy a property in an up-and-coming area that’s on the verge of gentrification. This way, you can get in on the ground floor and watch your investment grow as the area becomes more desirable.
Of course, properties in these areas are often more expensive than those in other parts of town. But if you can afford it, investing in a prime location is always a good idea.
Not sure what makes a good location? Here are some green flags:
- There are several public transportation options around the property
- It’s in close proximity to schools, parks, and other amenities
- The area is experiencing population growth
- There’s been an influx of new businesses in the area
- It’s been featured in the news or on popular real estate blogs
All of these are signs that the area is on the up-and-up, and that investing in a property there is a smart move.
You Might Need to Make Some Compromises
It’s important to set realistic expectations when you’re buying your first property. Remember, this is an investment, not your dream home.
That means you might have to make some compromises on things like size, location, and amenities. For instance, you might need to buy a smaller property than you originally wanted in order to stay within your budget.
Or, you might have to buy a fixer-upper instead of a move-in ready home. But if you’re willing to put in the work, you can end up with a great property that will start generating income for you right away.
You Don’t Have to Do It Alone
There’s no shame in admitting that you need help when buying your first property. In fact, it’s probably a good idea to enlist the help of a real estate agent, loan officer, and Denver property management companies as these professionals can guide you through the process and help you avoid making any costly mistakes. They’ll also be able to put you in touch with other resources, like contractors and home inspectors.
You Need to Have Patience
Finally, buying your first property is not a quick or easy process. It takes time to find the right property, get financing, and close on the deal.
If you’re patient, though, you’ll be rewarded with a terrific investment that can supplement your income and become your future home if that’s what you decide.
This major milestone also has a lot to teach you if you’re willing to receive the lessons. For instance, you’ll learn how to negotiate, how to manage your finances, and what all those real estate terms actually mean.
So, take your time and enjoy the journey, because that’s exactly what buying your first home is all about.