Thank you for taking the time to read our real estate investing blog! If you’re here for the first time, we hope you can take away some useful knowledge that will help accelerate your investing experience.
Investing in rental real estate produces something I like to call, “mailbox money.” By this, I mean passive cash flow from your properties that comes in whether you leave the house or not. This creates constant income with a very small amount of upkeep
Getting started can seem like an overwhelming challenge because real estate investing is an expansive topic with a million different ways to make money. There are also a lot of moving parts you need to learn before buying a property and signing on the dotted line. While it may seem overwhelming to start, it is definitely worth the time and effort. The lasting benefits will prove themselves to be worth the work.
I’m going to break down step-by-step the steps to buying your first property and explain my personal story about buying my first piece of real estate. This will help you come up with your own plan for buying your first property and start down the road to financial freedom and living the life that you want. This method I’m going to discuss is based on the typical process when it comes to buying a property. However, Rent To Retirement offers unique ways to invest. This topic will be discussed later in a different blog post.
STEP 1: LOOK AT SOME REAL ESTATE
That’s right; the fun part comes first! You should sign yourself up for a real estate property account on any number of websites such as Zillow.com. You can also acquire a real estate agent that will send you properties from the MLS (Multiple Listing Service) on a regular basis. This will give you a feel for real estate costs in your area and how much money it will take to purchase a property. By looking at properties regularly, it will also keep investing at the front of your mind and will motivate you throughout your investing journey to make this dream happen. Once you have your property investments making money for you, the process is very passive. However, the steps to getting there require discipline and diligence. Hard work will always pay off!
In my own process, I signed up for just about every single real estate listing website that was available. To further assist with my needs, I had an agent in my area send me weekly updates on properties. I also created a spreadsheet that would help me quickly analyze a property to see if it would make sense for me to buy or not so I could quickly filter through the properties in which I was interested. Keeping an organized inventory of the potential investment properties is vital. You’ll want to keep updated with the status of these properties. If one becomes unavailable, you are aware and can pursue other fruitful properties.
STEP 2: SAVE MONEY!
It’s no secret that real estate comes with a high price tag. In order to afford it, we will need money one way or another. With this comes the first step of saving enough money for a down payment. Your down payment will vary in cost depending on what type of loan you get. You can also partner with someone else who will put up the money in exchange for your help in managing the property or finding the deal. There are a plethora of ways to get money to buy your first property, but I suggest the K.I.S.S. method (Keep It Simple Stupid). This requires stockpiling money of your own and placing it in a savings account. This will allow you to buy a home that is fully in your name. The most important part is to keep this savings account dedicated towards your goal for real estate investing. It may be tempting to tap this account when you need some extra cash, but this will only delay your timeline.
In my own case, I accelerated my income over the course of one year by working my butt off doing overtime, working nights, dog sitting, and even renting out my car for extra cash. I was able to hide that money from myself so that I wouldn’t spend it by putting it into a high yield savings account at my local credit union. Take the time to speak with a professional at a bank and tell them your goals for this savings account. Hopefully, they will be able to help you with an account that will accumulate high interest to your benefit.
STEP 3: TALK TO A LENDER
Once you have a sum of money that you think is adequate for the down payment, (let’s say between 5-20% of a property’s value) you’ll want to talk to a bank or mortgage broker. These professionals can tell you whether or not you’re in a viable position financially to purchase a property. They’ll do a full financial background check to see if you’re ready to make the investment. If this financial professional deems you to not be in a good place, you may have to reevaluate some assets and reassess your plan. Don’t worry though, because you’ll at least have that valuable part of information from a professional in the field. It is much better to be aware of this unreadiness than to dive in head first and end up with larger issues, having already fully committed. Hopefully, you won’t have to resolve any issues and your overall financial picture will be complete. You will then be issued a pre-approval letter showing how much money you are approved to borrow in order to buy real estate.
For me, this is where I learned the most in the buying process. I found a lender online, received my pre-approval letter, and started developing a working relationship. However, I quickly realized that the lender was not organized nor responsive to my communication. This led me to finding another lender. It was an unfortunate detour in my journey, but I didn’t want to lower my standards. This was my future and I wanted to be sure my needs were property addressed. My real estate agent recommended a local lender to me that he had worked with before and who knew the area well. The new lender swiftly took the steps to getting me pre-approved and ready to make an offer. Don’t be afraid to put in the time to find the best suited lender. It will save from unnecessary setbacks and delays. You’ve already put in so much work and want to keep the momentum strong.
STEP 4: MAKE AN OFFER
Now that you’re armed with a pre-approval letter from your lender, you’re ready to get out there and start making things happen! You’ve dipped your toes, the water is warm, and now it’s time to dive in! The path to financial freedom through real estate is on the horizon. You’ve now seen hundreds of properties through your weekly property updates from your agent and browsing the property listings online. By now, you should have a feasible idea as to the standards for your first property.
That property for me was a new construction, 2-bedroom condo that was reasonably priced. I knew I wanted to go with new construction because it would have little to no maintenance issues or renovation projects. I wanted two bedrooms so I could live in one room and rent out the other to help pay for the mortgage. The price was in my comfortable range of affordability. This was important to me because I didn’t want to run the risk of stretching myself too thin financially.
Finding the “perfect” property is difficult. If you spend too much time waiting around to find the exact specifications you desire, you may miss out on many other amazing potentials. Real estate is a get-rich-slow scheme and it’s more about time in the market than timing the market. Waiting around for a better price or a “perfect” property can easily put you in a perpetual situation of never closing on a property. Now, I’m not saying you should just settle for the first decent property you find. This is your investment and your money. Make sure it is what you are looking for, but keep an open mind as to what are the most important details you want in a property and which ones you are willing to let slide by.
STEP 5: CLOSE!
Closing is just a real estate term for simply completing the purchase of your first property. Between making the offer and closing, there are many due-diligence items that you’ll want to perform. This will ensure you are buying what you think you are buying and maybe not just what is advertised. With proper guidance from your real estate agent, you’ll be making your way from the initial offer to closing in no time.
When I closed on my condo, it was one of the best feelings in my life. My agent Rad assisted me during the entire process and helped me overcome my fears about taking such a big leap of faith in real estate investing. I finally was able to “sign on the dotted line” and call a piece of real estate my own. I was now officially a homeowner.
Referring back to my “keep it simple stupid” method, there are a lot of details in which to keep track. Not everyone is able to find an all-star agent like my agent and friend, Rad. Although, the right person is out there and with some effort, you will be able to find someone who is an excellent match. I highly suggest leaving the details to the pros to make sure nothing is overlooked and linking up with a turn-key investment company, such as Rent to Retirement. There are people out there in the world that would be happy to sell you a property, make some money, and never hear from you again. That’s the opposite of what we do here at Rent to Retirement. We want to be involved as much as possible and help you grow your real estate investing goals. To us, it’s not simply a transaction that is complete once the property is your’s. It’s a journey in which we want to assist you the entire length. The reason I’m writing this post. I want to educate anyone willing to learn about real estate and how to invest within the market, regardless if they’re using Rent to Retirement or not! However, if you want a personal, tailored experience, to fit your needs and make you comfortable buying your first property, visit us at renttoretirment.com, email us at firstname.lastname@example.org, or call us at 800.311.6781. We look forward to hearing from you!
Thank you for taking the time to read this post. I wish you all the best in your ventures with real estate investing. It takes dedication and work, but the results will always be something in which you’ll take pride.