Once my husband, Lucas, and I decided [to buy an investment property], we were immediately confronted with the reality of the risk, the stress of the timeline, and the fear of the unknown.
Growing up, my mom and I spent our Sundays at open houses around our Midwestern hometown. We were never actually looking to buy a home; we honestly just loved walking around and dreaming (and yes, Dad, being a little bit nosy). We’d walk through a home and talk about which walls we’d take down, how we’d reconfigure the kitchen, or where we’d move the half bath. We’d stand on the back porch and dream about how we’d fit a pool, or where we’d position an outdoor fireplace.
On and on. House to house. Dream after dream.
And that’s just it. It’s all dreaming until you decide to actually do it. Once my husband, Lucas, and I decided, we were immediately confronted with the reality of the risk, the stress of the timeline, and the fear of the unknown.
In order to move forward, we had to figure out ways to minimize the risk and determine what we needed to have in place before feeling comfortable with this investment. And now I’m sharing them with you in the hopes you’ll either create your own list of “must haves,” or borrow ours.
Here are our 4 “must-haves” before buying our first investment property:
The company I currently work for supports real estate investors, and for two years I’ve been going to their events, reading their articles, and sitting in meetings where they talk about investment strategies. The knowledge I’ve gained from events with quality educational sessions, and inspirational investors who tell their brave stories of renovating properties have inspired me and given me confidence in this venture. I truly believe that, if I apply what I’ve learned (and recognize that there will be plenty of on-the-job learning, as well), this investment will be positive.
Looking to build your knowledge base? You can access tons of great content on this very website:
This one seems obvious, but I cannot stress it enough. You have to be surrounded by people you trust and people who will support you. I’ve been lucky enough to have secured the following members of the world’s greatest support system and I highly recommend you build one like it, if you want to do this kind of investing:
Lucas: My husband is handy and strong and just go-with-the-flow enough to support my crazy dream and dive in head first with me into this investment. He is the hardest worker I know and his schedule as a firefighter means he has full days off to dedicate to the renovations. The sweat equity he alone brings to the table has opened up our possibilities for which properties make sense to purchase. In many ways, he acts as the general contractor on our property, and I’d highly recommend finding a partner or contractor just like him, if you can. Organized, great communication skills, and construction know-how are must-haves. Excellent bone structure, great muscles, and tattoos are huge perks, but optional.
Our Realtor: Lucas and I trust Kyle Blake with our lives (and if you’re in Kansas City and you need to buy or sell a home, you should definitely use him #shamelessplug. We love you, KB!). He shoots us straight whenever we see a property. I can’t count the number of times he’s said, “We can do better” or “I don’t like this for you two. Let’s keep looking.” He puts us ahead of his commission and that is absolutely crucial. He also renovates properties himself, so he’s helped us assess cost and timeline for renovations on all of the properties we’ve seen. I am convinced that without him, neither of us would feel comfortable moving forward with this investment. Get yourself an honest realtor that you trust (or become one yourself), so you know you’re not unintentionally buying a lemon.
Our Network: We have a great network of generous and talented friends who have a wide set of skills and who have experience in this industry. Not only have our friends offered to help us paint, tile, drywall, and choose color schemes, they’ve stepped in on the business side, helping us set up our LLC, get our paperwork in order, and figure out the entrepreneurial side of this venture. We would be pulling our hair out without these people. Your network will be essential, so start assessing who you can rely on when you’re faced with questions or hit a roadblock or just need a pizza delivered at 8pm while you’re stuck pulling up linoleum.
I’m just going to shoot you straight and tell you that Lucas and I put some money my parents gave us towards the down payment on the house that we live in. So, while we’ve worked really hard and been great savers, their generosity and how we chose to use it, really helped put us in this position to go after this dream. We also choose to live in Kansas City where our reasonable cost of living makes it feasible for us to make an investment like this. We want to be good stewards of our finances and so it was important to us that we not out-buy our means. There is no way we would have made this investment if we didn’t feel confident that we could make the down payment without help and without putting ourselves in a bad position, financially. We will all have a different story in this area, but the concept remains the same: Be smart with your money.
4. The Right Deal
The numbers on the deal have to work out. No. Question. No matter how much you like the house or love the location, if the numbers don’t work, you walk away. There’s a science to this, and it’s complicated. Which is why my next column will dive into our process for deal assessment. I’ll take you through a couple of deals we walked away from, and then lay out the one we moved forward on, so you can see the differences. Finding the right deal is crucial.
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