5 Steps to Start Investing in Multi-Family Alaska Real Estate
Alaska real estate investing has its own set of unique challenges that most real estate blogs and forums do not cover. It often leaves the newer investor feeling ill prepared or inadequately informed. Fortunately, there are many successful real estate investors in Alaska and in this article we will learn from them based on their experiences.
Step 1: Make a plan. Get a journal and start with asking yourself these questions:
- How big is your dream? Do you intend to buy one or more investment properties?
- Are you willing to live in a rental, possible several over the next 3-5 years?
- On a scale of 1-10, how good are you at repairing house hold issues?
- What is your biggest fear or reservation with owning a rental property?
- How long do you intend to live in Alaska?
In order to route the best path, you need to know where you are at, what you’re willing to do, and where you intend to go to get there.
STEP 2: Talk to several Realtors, find a great one and stick to them.
There are good, bad and indifferent in EVERY industry. Even at your current job there may be people who you are amazed remember to breathe without being told. You need a Realtor who has a great network you can plug into. They will want to screen you first and make sure you’re serious about the industry with a consultation. This Realtor has profound benefits and you’re going to need them. Their business is kind of like a good-old-boy club. They have a long list of properties and clients they’ve built up over years and have knowledge, connections and deals that are a world all of their own. They have their own leases; move in conditions reports, CPAs, Property Managers and a long list of reliable contractors when you’re in a pinch. They should be actively investing, teaching and active in their local boards and organizations which provide them connections. Once you find this person, stick to them until you find another Realtor with a better network.
If you have a partner, spouse or another decision maker in the process you will want to make sure they are part of the consultation when you interview a potential Realtor. Since we’re talking about your financial future, don’t settle for anyone. Many people make the mistake of using an old family friend or someone they feel obligated to use because of a mutual or past relationship. You don’t owe anything to anyone except yourself. You deserve the best.
STEP 3: Get a local lender who understands income properties.
The fastest and most direct route is to owner occupy your first investment property. Government insured loans such as VA and FHA can be used to purchase up to a four unit building and require very little for a down payment as long as you are going to live in one of the units for at least one year. The amounts available for these loans are rather high for the Alaska market and your personal credit score can really dictate the terms of the loan. Get pre-qualified months before you intend to purchase. You need time and direction to adjust your credit and finances to get the best loan.
Your lender and Realtor should have a VERY close relationship. This is because they need to work together to structure a contract to purchase. Closing dates, pre-paids, credits, reserves, pro-rations, warranties and more all go into a contract and dictate the difference between a good buy and a phenomenal deal.
There is a BIG difference between banks and mortgage brokers. You may find that a Broker has more options than a bank and you may need to shop around to find the best deal.
A lender who understands income property will also understand how to “stack” loans. This is very important part of acquiring multiple properties. Loans are like tools in a tool box that should be used in a proper sequence on different kinds of real estate investment. Using the wrong kind of loan early on can make it very difficult for you to purchase another for years.
STEP 4: Understand the numbers.
You will need your Realtor and lender for this one again, and it’s important that they know how to run numbers better than anyone else around.
Remember: CASH FLOW SOLVES ALL PROBLEMS. Think about that. Name a problem that enough cash can’t solve. We can’t think of one.
STEP 5: GO TO REX (The Real Estate Exchange, Inc.)
What is REX? REX (Real Estate Exchange) is a club whose purpose is to create a safe haven for real estate investors to network with like-minded individuals for the purposes of education, training and motivation. The REX philosophy is that we should not depend on others to secure our future. Instead, we depend on acquiring and sharing knowledge to create wealth through real estate investing. Their motto is “Don’t get sold, get educated”.
No new investor should try to go at it alone. REX is where new or even seasoned investors can meet other successful investors who live, breath and work in Alaska and find out what has worked and not worked with people who are doing it locally. REX is a great way to start building your own connections and meet people passionate about real estate opportunities.
REX meets twice a month, once in Anchorage and again in Wasilla. REX is over 1000 members strong, the meetings are FREE and you get to network with real investors making real money doing real deals in real estate in Alaska.