Like the title says, there are a number of things people should consider before deciding whether they should become a real estate investor. They may not be sure if it’s right for  them, or they might not know what to consider. If you’re one of those people who are  on the fence, welcome to my four-part series where I answer the most commonly-asked  questions from those looking to get into real estate investment.


 

1. What are some things to consider when starting out?

Real estate investing is a business, so naturally you need a real estate investment  business plan. Spend some time deciding how much capital you have to begin with, and how much time you are willing to invest. These decisions made early will help you  decide what types of transactions you want to get involved with.



Also, it's important to read and acquire good real estate information but there's no need  to spend years buried in theory. Find an experienced mentor, surround yourself with an  experienced team of professionals and then get started. Ultimately the people around  you will increase the chance of success of your real estate investment business plan.  Many beginner investors don't realize this critical point and focus on "the deal" instead  of the people. A solid real estate investment business plan is more important to you  than finding one good deal. Good deals are everywhere, a solid real estate investment  business plan will keep you going in the right direction.

 

2. How is buying your first investment property different from buying a primary residence?

When you buy an investment property there will be several differences. However, with  residential real estate investing (properties with four units or less) the differences are  mostly minor.



The primary ones to be aware of are mortgage insurance and property insurance. If you put less than 20% down on a residential investment property there is mortgage  insurance just like a primary residence, however, the rates for investment properties are  typically much higher. You will want to be aware of these fees when working out the  carrying costs of the property. Also, the property insurance you will need is slightly  different. You will want rental property insurance. If you have tenants in the property, you will want to make sure they obtain Tenants Insurance, which should include the  contents as well as liability provisions.



If you buy an investment property with 5 or more units, you'll be dealing with commercial  mortgages. These mortgages have extra fees associated with them. The most  common are mortgage broker fees that are charged with commercial mortgages and  commercial property appraisal fees. You'll want to take this into consideration in your  real estate investment business plan.



And if you're buying a property to tear it down completely and rebuild the home then you  will likely require a construction loan. This type of loan product allows you to draw more  money from the lender at predetermined stages of completion. You'll want to get a  complete understanding of when you will have access to the funds so that you can plan  accordingly. With this make sure you have your real estate investment plan reviewed  by your lender so that you are on the same page and financing hiccups don't kill your  build. You don't want to become a motivated seller with a half-built property.





I look forward to sharing more things to consider before becoming a real estate investor  next Wednesday! Until then, you can ask me any burning real estate investment  questions you have by calling me at 905-683-7800.




 

Thanks for reading today’s BLOG!!!

Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com

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