Build Your Wealth as a Real Estate Investor
If you are considering investing in real estate and you do not know where to start, here are a few ideas on how to build your wealth in Real Estate.
NB: BUY AT THE RIGHT PRICE AND YOU WILL ALWAYS MAKE MONEY
If you have a down payment and you can afford a mortgage on your income and the mortgage would be less than you could receive as a rental, then you be in positive cash flow from the beginning.
If you can purchase a townhouse consisting of two or three bedrooms for say $120,000 and you can put down a 20% down payment ($24,000), qualify for $96,000 mortgage with a repayment of less than $950 including property taxes, Insurance and HOA levy and you can let the townhouse out for $1300 per month, you have a positive cash flow of $350,00 per month from the beginning. With increased rental each year, this can be a great start to your investment property. Set aside $50 per month for repairs and maintenance.
In year 2, you could add another property and a year later another one. The trick is saving up the down payment and then qualifying for the loan. It’s definitely do-able. Perhaps you could refinance your existing home and take some equity out or perhaps you could refinance a car or boat that you own or sell them and invest the money in income producing properties.
Another wonderful opportunity is to find properties with Seller finance options. A seller who is prepared to finance is a keen seller. He may even allow you a small down payment and negotiate a great payment option for the balance of the money. “Tired investors” will prefer to self finance and have a fixed income rather than look after tenants and new leases and lower returns from the bank.
There are still foreclosures available and working with the bank you often can get a lower down payment and a mortgage from them on the property.
- Don’t buy an investment property in a different State or more than an hours drive from where you live. You want to be able to look after your investment without hassles and without having to spend a fortune on travel.
- Research and get to know the area you wish to purchase in. It’s very important to be comfortable with your investment area. By seeing the locals you will know what kind of tenant you are likely to expect to find.
- Always buy an investment property in a safe location. Don’t buy in declining areas, look for areas that are on the rebound and up and coming.
- Build up 3 months mortgage payments on your investment property before putting the excess funds into your own cash flow. If you don’t have a tenant for a month at least it won’t eat into your own income and cause you stress.
- Research and interview various mortgage brokers and see what they offer you. Only once you have done your homework, then build a relationship into the future.
- There are tax advantages to owning a property. Make it your business to find out what you can claim, what is to your advantage and how this investment is going to help you in the long run.
- Don’t buy vacant land for investment, unless you are getting it at a great price. It is better to have an investment income than none at all.
- Always, always check references for potential tenants. Google the person, look for them on Facebook and feel comfortable with your choice.
There are many opportunities to begin building your wealth in real estate. We would love to help investors find those properties on a regular basis. If you are an investor and would like to contact us, or if this is a first time purchase, we have the expertise to assist you.