What's Typically Involved With Beginning Investing?
Buying investment property in Minnesota is no more or less complicated than buying your own home.
In fact the process is essentially the same.
1) Pre-qualify: you create more leverage for yourself if the seller knows your financing is read to go.
2) Choose your investment: use the help of your team of experts to advise you on what properties would make a good investment.
3) Make an offer: if you are purchasing in a development, pricing may be pre-determined. But if you are purchasing a single family home, for example, there is some room to bargain. Don’t “low-ball”. Sellers may be insulted and not look at any other offer from you, just based on that.
4) Purchase Agreement: This is just a fancy name for the contract you and the seller will sign, listing out the specific agreements. Here are some common elements:
- $ amount of deposit/earnest money
- Specifically states you’re the price & terms of the agreement
- Proposed financing you have chosen (this is why it’s good to pre-qualify)
- Rescission period – the amount of time you have to change your mind for any reason. This is different from state to state and varies on the type of investment property you purchase. For example, for a condo or town home in Minnesota, you have 10 days from the date you receive your “Condo Docs” to withdraw and get your earnest money back. After that, the seller may keep your earnest money.
- State the intended closing time that you and the seller agree upon.
5) Closing: On this date you will finalize your purchase and officially “take title” to the property. At this time, the balance of your arranged down payment will be due. For example you and your lender agree that putting 10% down is the best option for you and you put 2% down for your earnest money already, you will need to bring a cashiers check for the additional 8% to closing. Your lender will give you the exact amount plus any closing costs you are paying for upfront.
