Homeownership: Making the Move

How to Begin Investing in Real Estate for Your Family’s Future

“Real Estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world”  -Franklin D. Roosevelt

The number one question people always ask me is, “how did you get started in real estate” or “how can I get started in real estate?” — and my response will forever be, “buy a house.” Homeownership can come off as complicated, but really, it is just like buying a car, the difference being that real estate has infinite value. Real estate can be handed down from generation to generation. Real estate is a bankable asset and can always be leveraged. Real estate can be refinanced, rehabbed, developed, leased, subdivided, and the list goes on.

Your best bet is investing in residential properties that produce rental income, aka cash flow. You can start off by purchasing a primary residence. Turn your monthly rent into a monthly mortgage. You will be surprised by how much more you get when owning a home. That $800 rent for a two-bedroom apartment can turn into an $800 mortgage for a four bedroom, two bathroom (of course, taking into account where you live).

STEPS TO HOMEOWNERSHIP

Step 1 – Education: Knowledge is power. Find an investment group in your area or online. Listen to what other investors are saying and doing. Learn the language, formulas, and numbers. For example, return on investment, net operating income, net profits, etc. You can also enroll in an online course that teaches real estate investing terminology and strategies.

Step 2 – Save: It is always best to have at least six months of reserve saved. This is your cushion money, or what I like to call your saving grace. This money is for the unexpected, and the unexpected will happen.

Step 3 – Credit:  You are not going to get far if you do not have a good credit score. Take care of your credit by fixing any issues. ALL credit can be repaired and restored.  There are plenty of credit repair companies that can help with this. I recommend you pay a professional for this service.

Step 4 – Find a Strategy: How are you going to enter into real estate investing? I recommend first purchasing a primary residence. Not your dream home. That will come later. Purchase low enough that you can rent it out in a couple years and at a price point that does not max out your mortgage approval amount. Meaning if you qualify for $200k do not purchase a $200k property. Instead, purchase an $80k property.

Step 5 – Pre Approval: Get pre-approved for a loan so you can begin shopping for your investment property. Lenders will look at your debt to income, credit score, and savings. Your debt to income ratio is your income minus your debt with a little razzle dazzle in between.

Step 6 – Realtor: Work with a Realtor. Realtors are experts in real estate. A realtor will guide you through the process of homeownership and tell you everything you need to know every step of the way. A realtor will help set your budget, communicate for you, put in offers on properties, negotiate on your behalf, and link you with the necessary people. When working with an agent all you have to do is be a seriously motivated buyer and your agent will handle the rest.

Step 7 – Close: Buy the property, even if you are afraid. Just do it. It’s worth it. Block out all the negativity.

Investing in real estate allows you to protect yourself and your wealth. While the real estate market has gone up and down, it never declined over time. Over time, you will always get value from real estate that produces income when it comes to homeownership. In my professional opinion, the easiest real estate investing strategy for the average person is buying a place to live. After a few years, rent it out, and buy another place to live. Do this responsibly over a 20-year period, and you’re going to build a healthy amount of passive income.

Peace & Blessings