Prior to COVID-19, the economy was exceeding expectations, resulting in a lucrative seller’s market. Established investors were experiencing an increase in sales and profits. For those who now work from home, the lifestyle they now enjoy is something that many want to keep. Investing in real estate is a career that affords you a work-from-home platform. However, it’s not for everyone. Listed below are a few things to consider before leaving your current employer.
Do Your Research
As a beginner, you have a lot to learn about investing in real estate. This is why it’s important to do extensive research. Read articles from now successful investors and their beginnings. Take notes on mistakes they made along the way and skills developed to achieve success.
Financing the Project
If you don’t own a home and you want to start investing in real estate, companies like Lantzman Lending hard money lenders can help. They have many years in the business and offer fast turnaround times regarding the distribution of funds.
The Down Payment
Scoring the first property is exciting. However, keep in mind the higher the price tag, the more you will need for a down payment on the property. Open a savings account created for the sole purpose of a down payment. Check out the average price on home listings and work towards securing the funds. Once you have the down payment, you can actively search for the first home. Today, you can buy a home with as little as a 3% investment. Factor that number in, along with typical closing fees when looking for a property.
You will have more opportunities to save money with a good credit score versus a fair one. Before applying for a mortgage, make sure that your credit score is in good standing. Thankfully, you can acquire a free credit score annually. If your score is less than good, bring it up before financing your first property. This way, you’ll have access to the best companies and the lowest interest rates available.
Using Assets to Fund Properties
Your current home, the one you live in, can become a valuable asset that you can use to fund future real estate investments. With equity, you can refinance the loan and use the money to restore a fixer-upper or take on a total home rehab. You can also use the money to buy a second property using a HELOC. This is a process you can put on repeat, doing it all over again with each home investment. You take the profits from a sale and apply them to the outstanding mortgage on your home. Then when you find a new home to invest in, you start the process over.
Fixing up homes and then flipping them is growing in popularity. Investors find properties that either need TLC or extensive repairs. The key to making a large profit is finding a home well below market value and having the ability to restore it quickly. This requires having a system in place that includes available financing, reliable contractors, and knowledge of inspection requirements. Professionals with years of experience understand that only a quick turn around translates into a profit.
Some people want to own more properties and rent them to sustain a steady income. One way to find success is to search for properties that require only cosmetic repairs. This way you can keep costs down. It’s also beneficial if you are someone who excels in home DIY projects. This ability will save you money by eliminating the need for hiring an outside handyman. Owning a second home will provide a tax deduction and additional income. However, tenants can do damage to the property or fall behind on payments.
There are a few real estate investment options. Whether you want to flip or rent properties there are risks involved. Make sure to carefully weigh the pros and cons prior to the purchase of your first property.