Buying Investment Property? Ask Yourself These 5 Questions

Deciding to buy investment property is one of the best decisions you will ever make for your future. However, it isn't something you can decide to do one day and then rush out and do the next. There is a process that you have to learn and lots of information to digest. If you think you have done that already and you are now prepared to go out and make your first purchase, here are five questions to ask that will help you to prepare.

What type of investment property are you interested in? Are you interested in a single-family unit, a duplex or maybe a multi-family complex? Are you interested in commercial real estate? What about undeveloped land? How you answer this question will determine other things that you do later, such as how you decide to actually pay for the property. It is also best to choose one direction to pursue so you don't go on wild goose chases and so your team knows what they should be helping you with.

What area am I interested in? Are you going to invest in the city where you live? If not, what part of the country do you want to invest in? The Internet is your best resource for determining what area of the country you would like to put your time and money into. Ken McElroy, author of ?The ABCs of Real Estate Investing,? calls this Level I research. Later, once you have decided on a part of the country and a city in which to look, you will need to decide on a neighborhood. You will discover that during McElroy's Level II and Level III research.

Do you have a plan to pay for it? The type of property you are looking for (as well as your own assets) will determine how you can buy the investment. If it is a small property such as a house, you may want to pay for it outright. However, even if you don't have the money to pay for it, if it is a piece of property that has made money in the past, the bank will probably give you a loan. They know that they will make money on the deal regardless of what happens to your investment. If you are looking at a larger piece of land that you can't afford outright, you will probably be able to get partners or other investors to contribute.

Is my team in place? You can't do this successfully without a team. That is simply because there is so much work, and so many different types of expertise needed, that you simply can't do it all. There is not enough time for you to become proficient enough with real estate law and accounting, plus broker your own deals and manage your own properties. You have to delegate. That is why McElroy recommends you start with a lawyer, an accountant, a broker and a management company. After that, you may also need appraisers, tax consultants, a surveyor, a structural engineer, an architect, an estate planner and more.

What is your repair budget? This is very important. Knowing this will help you determine what areas to look around in because some areas may be full of old buildings or some newer buildings may actually be in need of a lot of upgrades. You will have to know what you are getting yourself into and whether you can handle it.

This isn't a a complete list of questions. Once you embark on your real estate investing adventure, you will discover a consitent list that you will need to address. But these will get you started on the road to asking yourself the right kinds of questions. Sometimes asking the appropriate questions is more effective than the answers themselves.

Real Estate Investing Expert Alex Anderson Helps People To Buy Minnesota Investment Property. As A Licensed Realtor And An Investor Herself, Alex Owns And Manages Minnesota Investment Properties In Her Home Town of Minneapolis. Visit Alex's Website At http://Minnesota.GreatInvestmentProperty.com To Learn More!