A lot of investors today want to include real estate in their portfolios, but don’t know where to begin. Real estate investing is not the same as investing in stocks and bonds, so it can be overwhelming to newcomers.
It doesn’t have to be difficult or intimidating. When done properly, real estate investment is actually one of the safest and best wealth-building tools out there. Here are six tips that will help you enter the world of real estate investing.
- Treat it like a business. Develop a sound business plan that includes goals achievable over one, three, five, and ten years. When you know where you want to be and when, it will be easier to get there.
- Check your credit report. Most lenders want to see a FICO score of 700 or better from borrowers who want to invest in property. Make sure your monthly debt-to-income ratio is low by paying off outstanding car loans or credit card debt.
- Locate a bank or mortgage broker. If you’re financing your investments, you’ll want to build a relationship with a bank or mortgage broker. Realtors can make recommendations, or you can ask other investors who they worked with. If you intend to pay for your investments with cash, you’ll need to submit a recent brokerage or bank statement when you make an offer, so the seller can confirm your ability to pay.
- Develop a property search strategy. Don’t confine your property search to areas close to home. Some new investors believe that they need to live close to their new assets in case tenants experience problems, but if the house or building is put into good repair before you start accepting rental applications, these calls should be infrequent.
- Talk to other investors. Join a real estate club in your area. These organizations are great places to meet and network with lenders and fellow investors. Some even offer courses on real estate investing. If you can’t find a club, check out an online investing forum.
- Examine different property-buying sources. You aren’t limited to your local Multiple Listing Service (MLS) or hunting down distressed sales. Great deals can be found on reputable real estate auction sites, which offer you the opportunity to buy properties outside your immediate area.
If you’re thinking about investing in California real estate, there are a number of strategic questions which must be considered from a legal standpoint. I’d love to help you think these important issues through. Give me a call today to learn more!
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