There is no doubt that the housing market is one of the most stable investments an individual can make. Whether it’s for your first home, a vacation home, or an investment property – real estate almost always yields positive returns. With so many people looking to invest in real estate these days, the competition for great properties and opportunities is fierce. Therefore, as a beginner investor, you need to understand what will set you apart from the rest of the pack. Here are some useful tips on how you can get started as a real estate investor and begin reaping those benefits sooner rather than later.
Investing is a long-term process and requires patience, careful planning, and research. All successful investors were once beginners too, and even experts make mistakes from time to time. The most important thing you can do when you first start investing in real estate is to read up on the basics. Read books, blogs, and articles written by real estate experts and learn as much as you can about the market, the various types of investment, the different strategies, and the various pitfalls to avoid.
Real estate is a very complex investment, and there is no single approach that works for everybody. This is why it is important to do your research and understand what kind of strategy will work best for you. What is the current mood in the market? How has it been performing over the past few years? How is the outlook for the future? Are interest rates expected to rise or fall? What are the average rental yields in the areas where you’re interested in investing? What are the average expenses and expected maintenance costs? All of these are important factors to consider when choosing an investment property.
When choosing an investment property, it is important to first figure out how much profit you expect to make from it. To do this, you should first estimate the expected rental income from the property. Once you have done that, you should calculate how much it will cost you to buy and maintain the property. It is important to remember that there are two types of rental yields that you should consider - gross yield and net yield. Gross yield is the total amount of rent received from the property minus any expenses such as the mortgage and taxes. Net yield is the amount of profit you will make from the rental property after deducting any expenses associated with the rental. We have investment-related mortgage products that can help you realize your dreams: we offer DSCR loans related to rental loans, Bridge loans, Fix & Flip loans, and more!
You can find additional information on our products page.
Typically, for a bridge loan, you can finance up to 80% of the combined value of both homes. If you’re selling a home for $200,000.00 and buying another one for $300,000.00 you can borrow $400,000.00 max.
As for the rest (in this case, $100,000.00), you’ll need that handy either in home equity, savings for a down payment, or some combination of the two. Once your home sells, you pay off the bridge loan and then apply for a new longer-term mortgage with a more favorable interest rate to refinance just your new home.
You can use a rental property calculator to analyze your return on investment, cash flow, and capitalization rate. You’ll need to know the purchase price, loan terms, rental income, and property operating expenses for your rental property.
Cash flow is essential for generating wealth through real estate! With our long-term rental property loans, you can purchase or cash-out refinance on any rental property. This includes single-assets or portfolio aggregations.
With a minimum of 20% down and a 600 FICO score, you can qualify for a 5/1, 7/1, and 10/1 interest-only ARM or a 30-year fixed interest-only payment with low rates.
Qualifying properties include single-family residences, 2-4 units, condos, PIUDs, and townhomes.
An FHA 203(k) loan simplifies the home renovation process by allowing you to borrow money for your home purchase and home renovation costs using only one loan.
FHA 203(k) loans are backed by the federal government and are a great loan option for those who want to purchase a home and perform upgrades, repairs, remodel or customize to their needs and wants.
FIX & FLIP:
Fix and flip loans are short-term, real estate loans designed to help an investor purchase and renovate a property in order to sell it at a profit—generally within 12 to 24 months.
If you need liquidity and cash flow management assistance (to ensure your project gets completed) this loan is for you. This is a great program for investors that fix & flip properties quickly. We finance both acquisition AND renovation costs.
The more experience an investor has, the fewer out-of-pocket costs there will be. The more real estate investment experience you have, the fewer out-of-pocket costs there will be.
Before you even think about buying a property, you should have a budget and a plan that outlines how you will finance the acquisition and any renovations you plan to do.
For example, if you want to buy an investment property that costs $200,000 you’ll need to have $20,000 for the down payment, $150,000 for the mortgage, and applicable closing costs.
As soon as you start looking at properties, you’ll notice that the real estate market is a very busy place.
Therefore, it is important to stay alert and keep an eye out for great opportunities. If you wait for the perfect opportunity, you might end up holding on to it for a long time as there are very few “perfect” investment opportunities.
Most investments are successful because the investor was able to recognize a good opportunity and took action quickly. You should consider attending real estate investment seminars or workshops so you can learn more about the industry and learn from the experience of experts and other investors.
You can also join a real estate investing club or forum where you can learn and connect with other people who are also interested in investing.
The real estate market is a great place to invest your money, especially as a beginner. However, you need to be aware that it is also a very competitive market with investors out there looking for the same deals that you are.
With these tips, you’ll be well on your way to finding the investment property that’s right for you.