There are more ways than one when it comes to investing in real estate and many people are taking different routes depending on their job, credit score, financial history, etc. However, there are always some key principles that every investor should follow no matter what path they take. This will be especially crucial when they are new to investing.
Below you will find a few ways that you can start preparing for your first real estate investment.
There are numerous ways to get financing for your first investment, but saving and having proof of consistent saving will help when finding a lender. Successful investors start saving a certain amount from each paycheck (plus more if possible) that stays tucked away until their purchase. Doing this will also teach you the value of self-restraint and the value of money. This can obviously be difficult if you have student loans or any forms of debt. But if you focus on paying off your high-interest debts first, pay more than the minimum balance and only spend on what you NEED. You will pay off your loans with lightning speed.
2. Credit Score Exercising
Investing in real estate isn’t something you can just start overnight. Real estate will often be one of the most expensive things you will ever do. It’s important you understand the concepts as well as connect with like-minded individuals. One of the most important things to look at, especially if you are looking to finance a home purchase is your credit score. Fortunately, when it comes to hard money loans, credit isn’t as important, but if going the traditional route it is of the utmost importance. Having good credit will allow you to qualify for the best rates possible, which has the potential to save you hundreds per month on your mortgage payments.
3. Don’t Doubt Yourself
Everyone has to start somewhere and you shouldn’t let your fear of failure get in your way. Failure can and will happen, it’s a part of life, and it’s a part of investments. There will always be risk involved, but if you do your research, and associate with the right people you can help to minimize your risk and make money! You will make mistakes, but most importantly you will learn from these mistakes. The most important thing is to just get out there and start investing and learn along the way. You may think you have time now, but trust me, before you know it it’ll be time to retire. Where do you want to be when that happens?
4. Follow Your Head
It’s easy to base decisions on your heart instead of your head. Especially when it comes to real estate. A property may look perfect on the outside, but it may not be all that it’s cracked up to be.
This happened to me on my first property. The inspector I hired seemed credible and had good reviews, and he even pointed out some pretty major things that needed to be fixed. However, once I got the house there were numerous things that weren’t caught and cost thousands of dollars in repairs after the fact.
Getting professional advice is always recommended, but making sure to double check their credibility and experience is also just as important. After all, there are plenty of things that could be beneath the surface you wouldn’t see upfront such as foundation or plumbing issues. The last thing you want to do is follow your emotions or your heart. It’s all about doing the math on this one…
5. Study The Market
Speaking of math… Buying, selling and renovating is one of the shortest, most exciting parts of real estate. That, however, is just the tip of the iceberg. Before you even step foot on a property you plan to buy, you need to do your research. You can start by finding your target price range, seeing what homes sell for in that range, how long they take and how many times they’ve been reduced. When looking at the markets, there are few things to take into consideration such as comparable properties, public transportation, schools, etc. Planning and researching as you can help minimize risk and that means more money in the long-run.
Welp, that about sums it up for today. Go out and enjoy the sunshine!
Good Luck, Newbies