Real Estate Investment-Where do I Start?
I want to invest in Real Estate. Where do I start?
Rule #1→ It’s NO walk in the park!
I sat down with Bo Rodriguez at Fairway Mortgage to pick his brain about advice he gives to first time investors and here is what he had to say…
First and foremost, people need to know that a down payment on an investment property is high! (Between 15%-20%) and your first investment will always be the toughest. You have to have LOW DEBT AND GOOD INCOME. If you think about it, your income will need to be able to withstand two house payments essentially (at first) so getting your money in line is the single most important step you can take to get yourself set up for successful investing. Recognize that your investments are a business, and plan for it!
Rule #2→ Check the cash flow!
If your money is coming from an outside source, keep in mind that a “GIFT” is always better than a LOAN! Taxes, taxes, TAXES! You always want to put your money where the numbers will work. Plan a vision for a year out, 5 years out, and 10 years out. You need to be able to realistically meet those future goals! Over time your investments will appreciate, and the better prepared you are, the sooner you are likely to see those results!
Rule #3→Find your Niche
RESEARCH = FORESIGHT! The key is being able to marry what is popular, with what you can afford. Look into what styles of homes or layouts are popular. What neighborhoods are up and coming? You’ll want to position yourself in a way that will get your “business” BOOMING! And the best way to do that is 1. Financial Responsibility and 2. Foresight! If you can get ahead of the game or involved in the early stages of a neighborhood “face-lift” you’re likely to be more than pleased with the return.
Rule #4→ Anticipate Problems
There WILL be road blocks along your journey of investment. That is a GUARANTEE! The importance of leaving yourself wiggle room in your time frame AND your budget cannot be overstated. Give yourself 1/3 more time and money than you’re expecting you’ll need. Kind of like setting your clock a couple minutes ahead to make sure you’re on time to work.
Rule #5→ BE PICKY!
Think of your renters like your second (or third or fourth) family. When problems happen with your dishwasher at home, you will fix it ASAP! Renters will expect the same, if not MORE from you, and if you don’t come through for them, say hello to negligence complaints. If rent is due on the first, you don’t want to be hounding someone on the 10th asking when they’ll pay. Take the appropriate time and steps necessary to assure you’ve got reliable people in your property who will take care of it, and abide by the rules. Whether it’s 1 property, or 10, your investments will take up a part of your life. Find someone who knows more than you, and pick their brain apart with all of the questions you have! You’ll want to have your own investment guru! (Click HERE and HERE for a couple that we recommend)
Rule #6→ Keep your eye on the PRIZE!
If rules 1-5 don’t scare you away then, congrats! You’re probably pretty well suited for investment in real estate! So hang in there, seeing all your efforts pay off TAKES TIME. So have some patience, because if you can make it through the tough parts, your payments will go away and you’ll one day be able to join that small circle enjoying the benefits of the sweat, blood, and tears, they’ve put into creating a SUCCESSFUL business! AHHH!!!