I wrote a post about 5 Mistakes When Buying Your First Property that I personally made to give you insight into mistakes to avoid. The first area I messed up was in the amount of time it took me to secure my first deal. The below goes deeper into my mistake and offers ideas on how to avoid the TIME mistake.
Prior to closing on the duplex I spent about 15 months searching for properties probably viewing about 100 plus duplexes and single-family homes. I wanted to find a multi-family property but the inventory wasn’t high-quality in my price range and I wasn’t really sure what market rents were. The first mistake I made is thinking the process would be quick and simple. I had it in my head I’d find the right property quickly, but I didn’t understand where we were in the market cycle and that good deals were harder to find. The other caveat is I didn’t really know what a good deal looked like if I came across it.
Part of my problem that took me longer to buy my first deal is that I wasn’t sure what type of property I should invest. I looked at a wide range of multi-family and single-family homes in very different neighborhoods. I knew I wanted to invest for cash flow but didn’t necessarily know what that meant or what a good target was to cash flow each month. I listened to the Bigger Pockets podcast, a real estate investing podcast that features a wide range of investors that invest in different markets, properties, and at varying levels in their career. It was very useful information but after each guest, I wanted to try their way of investing. It became almost a cripple at some point as I would keep changing what type of property.
Eventually, I got so frustrated that I couldn’t find a deal I bought a small plot of land and decided I was going to try and build on it. I spoke with builders and looked at comps and invested based on the future prospects of the area. Ultimately I just needed to buy something and it wasn’t the best or worst decision, but I finally closed on something.
I kept looking for properties but focused on working with builders and came close to signing a contract to start construction, but the real estate broker I had been working with reached out because she had an off-market property one of her partners was selling. I looked at it and gave them their full offer because I’d done my research and knew my numbers from all of the time I had spent looking at properties that I was getting a good deal.
Once I had the property under contract the rest went fast, simply because I already had a mortgage broker and a home inspector. Sourcing your first deal may take longer than you expect, but don’t fret because all of the work you are doing analyzing deals, walking properties, and speaking with folks in the real estate business will equip you to move quickly when you do find a good deal.
Set your expectations that the process of finding deals will take longer than you expect and the rest of the process will go faster than you anticipate.