Real estate has become the go-to wealth-building opportunity for investors of all stripes looking to improve their financial picture in a hurry. There’s a reason why real estate has formed the most important component of millionaires’ portfolios for generations, and the opportunity to grow wealth has recently become a major cash cow for those with lower net worth as well.
Financing is available for real estate investors to get into the game now, creating a great way to transition from purely stock market-driven investments to alternatives with the potential for huge growth opportunities.
Find real estate that inspires a high quality of life.
Using a real estate agent like a “we buy houses” service is one part of the overall picture — and an important one for finding a fair price, at that. In fact, these services can help create a strong cash flow that will help you launch into second and third properties concurrently. Real estate investors require this professional help in order to continue identifying homes with great upside potential. Buying homes as a real estate investor requires a twofold approach. You must find a home that someone would want to live in, regardless of whether you intend to resell the property or list it as a rental in order to create rental income.
Many homes that go for a bargain price are foreclosures or are reduced because of extensive fixes that must go into the property before it can be effectively lived in. Real estate agents can help you identify properties that strike a happy medium in this regard. A property with some minor issues that need fixing might be listed for an asking price lower than the current market value but require only a week’s worth of work in order to put the home on the market. A professional eye for these small details is a great way to improve your return on investment in the early days as you build this knowledge base for yourself.
Start planning early for maximum impact.
Homeowners know the importance of a long term vision, but real estate investors sometimes forget that buying investment properties requires this same long vision. Hard money lenders in California are in the investment business as well, and these lenders — traditional financial institutions and private equity lenders alike — invest in the borrower. It’s certainly important to find a property with a bright, open space that welcomes both tenants and guests, but planning your financial approach is equally crucial in facilitating a smooth buying experience.
Many real estate investors choose to leverage the home equity they already possess in their primary welling in order to take advantage of lower interest rates or more favorable repayment terms. But not all investors already own a property to leverage as collateral or the accrued equity in their homes in order to achieve this end. In this instance, taking great care of your credit score is essential to making your first real estate buy.
Lenders want to see that you are responsible for your financial assets and debts before they are willing to extend a line of credit, for any type of purchase. Beginning to pay off debts as quickly as you can in the six to twelve months prior to a loan application — a hard money loan or traditional borrower arrangement — will help speed along the process when you do arrive at this important step in the investment process.
Likewise, when you begin to see a return on the property, managing this debt responsibly is the best way to create additional borrowing opportunities in the future to make the entire process as painless as possible.