Making the decision to purchase new real estate depends on a range of considerations, including location, budget and timeline. When searching for existing or new construction homes, preapproval from your lender should be your first step – this will enable you to narrow your search further while organizing house tours from both categories so you can make an informed decision.
Research the local market. Assess median home prices, average rents and vacancy rates of the neighborhoods or cities you are considering so as to identify areas which meet the 2% or 1% rule more easily and allow for properties with strong cash flow that generate strong profits and cash flow.
Contract Terms. Typically, buyers give an “escrow account” check equaling 10% of the purchase price to the attorney of the seller for safekeeping in an account known as an escrow account. Most residential contracts also contain cancellation rights such as those related to financing issues, engineering problems or termite infestation; allowing a buyer to back out without penalty if certain conditions aren’t fulfilled within an allotted timeframe. Furthermore, most contracts include a “down-payment clause”, in which a portion of purchase price must be given as soon as signing.
After signing the contract by both parties, their attorneys will order a title report from a title insurance company to ensure the seller has good title to the property and no outstanding liens that need to be resolved prior to closing. In addition, they will review a survey of the land to make sure there will be no interference with neighboring homes or any encroachments by future development on neighboring properties.