By Leonard Baron
Q. I’m a first-time home buyer and want to concentrate on buying a foreclosure because I know those are the best deals. Does that sound like the right way to go as a first timer? Gary T., Savannah, GA
A. Hi Gary, I don’t recommend concentrating on buying a foreclosure. I recommend concentrating on buying the right property for you for all your RIGHT reasons -- whether a foreclosure, short sale, or traditional sale. You want to get a fair deal, but much more important is to get a property that you believe you will love and own for a very long time. People earn wealth on real estate via long-term ownership, and the more you love the property, the more likely you are to own it forever.
So you should shop all the properties and stop believing you are going to get some incredible deal; properties are priced to market and the discounted ones probably have some issues that you may not be aware of until you start living in the property. Regardless, make sure you take the time to get a great feel for the local market and values where you want to buy. Also, don’t overextend yourself by purchasing too expensive a property. And I’d suggest you stay away from properties that need a lot of work. Lastly, make sure you have a thorough home inspection where you work hard with the inspector to really identify what needs fixing, repairs, and replacing so you can get bids to clear those issues and confirm your deal is truly reasonably priced. Good luck!
Investing in Rental Properties
Q. I bought my first house a few years ago right out of college and now would like to start buying rental properties. What are the best cities in the U.S. to buy real estate and where do I start? Tom C., Phoenix, AZ
A. Hello Tom! The best city to buy a rental property is the city in which you already live in – assuming you plan to stay there. Long-distance rentals can be tough to manage profitably, and it’s much better to have properties that are driving distance from you in case something needs your attention. Believe me – it will happen at some point over the years.
Since you are recently out of college, you probably don’t own a lot of stuff. This is good because that means you have time to build your acquisitions. The way to get started is to buy a property, live in it for a year or two, then rent it out, and buy your next personal residence. Repeat this process every 3-5 years and if you can successfully acquire 6-10 properties in the next twenty years – and they are good cash-flow positive properties -- you’ll be retiring early with a nice stream of cash flow and your main concern will be where to spend it!
Leonard Baron is America’s Real Estate Professor® - his unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate owners how to make smart and safe purchase decisions. He is a San Diego State University Lecturer, blogs at Zillow.com, and loves kicking the tires of a good piece of dirt! More at ProfessorBaron.com.
Email Your Questions to: Leonard@ProfessorBaron.com
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