Where to Buy Real Estate?

Picking the Right Type of Property & Location

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People often debate where to buy real estate. What is the hottest market right now? Well, one important aspect of buying real estate is knowing the location and type of property.

I’ve made this mistake which I wrote about 5 Mistakes to Avoid When Buying Your First Property recently. This is the second solo article diving deeper into each of those 5 mistakes. The first area I messed up was when to buy real estate and the time it took me to secure my first deal. The below goes deeper into my 2nd mistake. I explain my mistakes in detail and offer ideas on how to avoid the where to buy real estate mistake.

Location, Location, Location – Where to Buy Real Estate?

I struggled to truly identify what type of real estate investing I wanted to pursue. I knew I wanted to invest in cash flow because I saw my family make mistakes investing based on appreciation during the bubble. Thus my most important criteria was cashflow. Ultimately, no matter what the “value” of the property I wanted it to put more money than it cost me each month. What I did not realize was how many different types of property could cashflow. From residential – single-family to multi-family, commercial, section 8, and A-D class neighborhoods, I considered them all. I struggled to find focus initially because there are strategies that work for almost every type of real estate asset.

Financial Glass - Real Estate Map

First Understand WHY You Are Buying Real Estate

Before deciding on what types of property and locations to focus, first understand why you are buying real estate. Is it to generate cash flow and income? Is it to diversify your investment portfolio? Or are you looking for a store of wealth? Answering the why behind your investment in real estate is important. It will help you determine what types of properties and in what markets to focus.

Once I identified my main purpose for real estate was to generate cash flow I then was able to start to identify the types of properties I should consider. Single-family, small multi-family (2-4 units), or apartment complexes. I initially made the decision to pursue small multifamily because I could qualify for traditional financing through a regular bank or credit union. I began looking online at Zillow, realtor.com, and craigslist. Also, I started working with a real estate broker whom I found walking through an open house.

Simultaneously, I got pre-qualified for a loan through a mortgage broker. This helped me understand what type of properties would fall into my price range. As such I could focus on where the locations of those types of real estate properties were that I wanted to buy.

Ohh, Look Over There!

Eventually, I got side-tracked after looking at many dozens of multi-family properties. Simply, I could not find any deals that were quality and would cash flow. I began looking at single-family homes and apartment complexes under 16 units. I spent a lot of time exploring more property types and ultimately losing sight of the type of properties I had identified as fitting my initial criteria. Eventually, I got frustrated and purchased a small piece of land zoned single-family just to buy something.

I’d now spent 10 months and bought a piece of property that did not meet my one criteria for why I was investing in real estate in the first place… cash flow. YIKES!!!!

Finanical Glass - Mistakes Woman with Head in Hands

To reconcile this I spoke with a couple of builders in the area and received estimates for putting new construction on the lot. Hopefully, I’d find an opportunity to flip it or build it as a rental.

Back on Track

Then I received a call from the broker I’d been working with about an off-market duplex. It was in one of the preferred neighborhoods I had looked at other properties. I already knew my numbers on the property for cashflow purposes and was able to quickly scoop up the property.

It took me about 15 months from when I first began looking, but I eventually was able to purchase my first property.

TLDR – Where to Buy Real Estate

My piece of advice for folks is once you understand your why behind real estate investing. Once you’ve done that you can narrow down the property type and location. From there keep searching and don’t get distracted as I did! You’ll want to go look at properties, drive neighborhoods, and make multiple offers to get the best deal.

Original post 5 Mistakes When Buying Your First Property
When to Purchase Real Estate?

Too Many Credit Checks
Know Your Numbers

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2 COMMENTS

  1. […] Before I debunk this myth, this article is part of a series on the 5 Mistakes to Avoid When Buying Your First Property. This is the third article diving deeper into each of those 5 mistakes. The first area I messed up was when to buy real estate and the time it took me to secure my first deal. Second, was 2nd mistake deciding location and type of property. […]

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