You’ve read the books. You’ve gone to the seminars. You’ve talked to all your family and friends about it. You have your Realtor, Lawyer, Accountant, Handyman, and Property manager ready, and you’ve prepped them well.
Now you’re ready and raring to go – you’re going to buy your FIRST investment property. But before you pull the trigger, make sure you understand the following, and implement them in your project plan to ensure your purchase’s timely and successful completion.
- Financing pre-approval. First things first: you can’t buy a property if the bank won’t lend you money. Without financing, there’s no point in making that first phone call or viewing that first property. You will waste your time, but more importantly, you will waste your team’s time. Since most of your team works on commission, hitting this roadblock three weeks into the property search will equate to your and their wasted time after you have invested all those hours with them, and we all know that time is money.
- Inspection report review. If your property inspector is good, they will inspect every corner of your property. Chances are that you are not buying a brand new property, so read every section of that report, itemize all of the defects that you are not prepared to pay for, and use it as a negotiation tool with the seller.
- Additional financing documentation. After you have removed condition, your lender will require another set (third) of documentation from you in order to give their final approval of the deal. Don’t get frustrated with your mortgage broker; they’re just doing their jobs when they ask you for a third batch of financial records. Be prepared for it, dig up and have all the required documents ready.
- Renovation plan/schedule. Since you’re not buying a new property, you may need to complete some form of renovations before your unit is rent-ready. Make sure that from the first day you start paying the mortgage, your renovation crew is ready to execute their plan so that you minimize your days without revenue.
- Delivery of mortgage instructions. Once the conditions are waived and the final mortgage approval is obtained, your lawyer will await the final mortgage instructions from the lender. Make sure that you follow up with your lawyer and mortgage broker to confirm receipt of this document. Sometimes, the lenders are too busy and “forget” to deliver the documents to the lawyer until the last minute, which could jeopardize your closing date for the property.
- Delivery of real estate instructions. Similar to #5, but this time follow-up with your lawyer and Realtor to confirm receipt of the documents on time.
Always treat any investment purchase as a full-scale project. This means having in place a project plan, timeline, team members, and identified risks and issues.
By understanding the details that have the potential to delay your deal, or worse, alienate you from your team, you can be better equipped to complete your project successfully.
In all cases, choosing the right Realtor is paramount to your success. A good relationship will ensure that the potential stress level of the above mentioned steps will be reduced significantly. A good Realtor will always be one step ahead of the process and will follow up with you on every move well before it’s due to be made.
(Parts c/o Real Estate Wealth)