Decide your strategy
First, you will need to determine what your strategy will be in real estate investing. Do you want to buy a property, fix it up, sell it quickly with seller-financing and later sell the new seller-financed Note to a note buyer for cash, Or, do you want to buy a property, hold it and wait for the market value to increase, Do you want to deal with renters, All of these questions are ones that you need to answer before you invest in any piece of real estate.
If you're buying with the strategy of renovating and then selling, then it is time to start your renovations. On the other hand, if you're buying with the strategy of renting the property, it is time to start looking for tenants.
You see, the point of having a strategy for profiting from the purchase of any piece of real estate must be your first decision, because everything that comes after that is dependent upon it.
Do your home work
You will need to learn how to investigate the value of properties yourself. There are several online sites that are helpful in determining the real value of real estate. DO NOT rely on tax values - they are not reliable nor accurate.
Find three mortgage brokers and learn what interest rates and closing costs each one charges. (Check out your local bank or credit union as well). Take copies of your three credit reports and choose a sample property for each broker to run hard numbers on.
Location, location, location
You can roll all of the various factors for determining whether a location is good or bad into one simple word: desirability.
Keep in mind the ‘visibility' factor. If a neighborhood or an area has become famous or even infamous, property values rise regardless of the location. Convenience is another factor when considering the desirability of the location of a piece of property. People do like to live close to where they work and where their children attend school.
You need to find the "hot" markets when buying investment property, and in a nutshell, the hot market is where the people are GOING. Determining where people are going is the trick.
Business can also cause real estate prices to go up and can create hot properties for investment purposes.
Your first investment
Now you are ready to actually make your first investment. The objective is to buy low and sell high, and that means that you have to make a guess (an EDUCATED guess) as to what is going to happen tomorrow or next week or next year or ten years from now.
You want to choose the lowest price house in the best possible neighborhood to put a contract on. Let's say the cheapest two-bedroom house in the best neighborhood in Fort Worth costs $100,000 and the next cheapest, comparable home is listed for $140,000. If you buy the home that is priced at $100,000, you can raise your price to $130,000 and make a nice profit.
Real estate investing is not an exact science. You always have to weigh the risk against the potential reward. But when choosing what properties to invest in, this should be made strictly upon solid facts.
Closing the deal
Show the seller your pre-qualification letter from your lender. Then get the required inspections for termites and get your appraisal. Once you have all of your ‘ducks in a row' so to speak, it can take about 30 days to make the final close.