By Melissa Dorman, December 9, 2020
Regardless of whether you’re purchasing an investment property or a single family home, the first time when you buy a house can be truly overwhelming. It feels like there is an endless amount of research to do and so many things that can go wrong. Besides, you’ve likely heard a lot about what can go wrong and about how hot the market is. You may be wondering whether you can even compete!
Let’s calm your nerves with a few simple steps to focus yourself and get on the right path.
1. Discover Your Goals
Are you buying a single family home or a small multifamily? Is it a house hack that you will lease up in a year? It is safe to say that you are purchasing this property to live in for a couple of years and afterward keep it as a rental later? It’s important that you know the answers to these questions in advance. This will shape your financial plan.
For instance, in case you plan to house hack, you should be asking yourself “will the all the expenses be paid by the future tenants when I move out?” Or if this is your “forever home”, you may need more space for storage if your family continues to grow.
If this isn’t your “forever home”, then lighten up a bit. Don’t be too choosy in a strong seller’s market. Be flexible to finding a good house, not a perfect house.
2. Find a Local Lender
Preferably, your mortgage lender will be somebody who really understands your finances—not somebody who just sells products. You need somebody who will hear you out, listen to your objectives, and give you the best loan product for you.
You probably won’t find this individual immediately, and that is OK. Not all lenders are made equivalent.
The advise I give my client’s is this: Stay away from big box banks (USA Bank, Wells Fargo, Chase etc). They will lure you in with low rates or special offers but inevitably they will fail you when it comes to communication and closing on time. I have seen many clients (against my advise) lose thousands of dollars when they close 10-45 days late, or when the appraisal comes in low because of a budget appraiser, or when they miss the house of their dreams because they can’t get a hold of their lender on a Saturday for their pre-approval. Find a local, experienced mortgage broker who work beyond the 9-5 hours to make sure you close on time.
3. Plan Your Budget
It’s not just the principal and interest you need to think about. When discussing your budget needs, think about the taxes, insurance, and any HOA fees. Don’t forget that you will need to put aside money each month for maintenance and repairs, capital expenditures over time (roof, plumbing etc) and landscaping. If you plan to rent the home out, make sure the future rent will cover all these expenses so you don’t have negative cash flow.
4. Find a Great Agent
This is a crucial step that makes all the difference. You need to find somebody who will hear you out and somebody who will work hard for you. Make sure they understand your objectives and are well informed on the market. A good agent will tell you the truth and tell what it takes to win a multiple offer situation. They will also talk you out of buying a bad property! If you find a good agent, much of the heavy lifting is already done because you can rest assured they will take care of you from start to finish.
5. Make Offers
When you find a house that meets your criteria, make an offer! Don’t sleep on it. In a hot market, the deals happen for those who can move fast while everyone is still running the numbers. You have planned so hard to get to this step, don’t let fear paralyze you from making a big change in your life. Making offers is the only way to buy a property. And besides, you have the whole inspection period to way the pros and cons once you collect the rest of the information. Doing something new is always scary… but that’s how you know you are growing.
Melissa Dorman
Broker | OR & WA
She/Her
Ten years ago, Melissa was living in a slum in Kolkata, India, helping over 200 women escape sex trafficking by providing alternative work at a social business.
It was there she discovered her passion for financial education as a means of empowering people to move out of poverty. After graduating from UCLA with a Masters, Melissa spent 5 years working as a Social Worker; assisting clients facing homelessness, in jail, or at a psychiatric facility.
As much as she loved the work, imagining saving for retirement on the meager salary of a social worker was becoming grim. That's when Melissa discovered "passive income." In no time, she fell in LOVE with real estate as a vehicle for wealth. Soon after, Melissa began locating off-market multi-family properties to purchase through creative financing strategies and win-win opportunities. Two years into investing, Melissa quit her day job as a Social Worker to become a full-time broker and investor. Initially, she was drawn to people in difficult circumstances, so she developed extensive experience assisting families facing foreclosure, short sales, and probate. Melissa is well versed in helping her clients overcome complex real estate challenges.
Currently, Melissa is teamed up with Super Broker, Yascha Noonberg at Living Room Realty. Together they assist clients to achieve their real estate dreams, including how to strategically buy and sell a personal residence to maximize profits. Far from the slums of Kolkata, her greatest passion now is empowering other working professionals to develop passive forms of income through buying multi-family properties in Portland.
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- T: 503-567-4697
- melissa@livingroomre.com
