Real estate is hot right now with all-time low-interest rates (3% at the time of writing), and a lot of people are wondering what it takes to join the elite club of real estate investors. If you’re anything like the rest of us, you’re probably asking yourself, “What steps should I take?” Luckily for you, this article will cover everything you need from the very beginning to closing! Keep in mind there are a lot of ways to become an investor, but in this article, we will mainly talk about residual income as a Landlord.
First Step: Get Approved for a Loan
It may be tempting to plunge yourself into the market and begin looking and dreaming of buying your next investment property; however, rarely do we ever find ourselves with 500K+ in extra money to invest. Therefore, the first step is to speak with a lender and see what kind of rental property you can obtain. Not only will they help you with the loan, but they also have access to real estate information that will help. To make this step easier on yourself, you can join a leading real estate investment firm, without all the headache and daunting logistics of real estate ownership.!
Second Step: Find the Property
Now that we have the money! Let’s find the property! Make sure to have someone who knows what it takes to close the deal and get you the best price possible, another reason to go with a firm like 770 Capital Investment Group since they will be able to not only get the job done but have been in business for years and they know what it really takes!
Here are some key factors to take in:
- Make sure to focus on continued cash flow rather than a huge profit monthly from the rental property (e.g., your mortgage is $1,600 and the condo/home rents for $2,100)
- Find it in a reasonable place that you know will rent quickly.
- Try and keep it local in case any mishaps you are nearby.
- Save some extra money for vacant months (If any)
- BONUS: FInd the property in an upcoming neighborhood (e.g., Inglewood before the boom)
Third Step: Close the deal
Hopefully, you went with a firm to get the best deal possible! However, if you did not, no worries! The first step to ensuring a closed deal is to make sure the funds are in escrow, and you have the down deposit ready. By now you should have made sure there are no liens on this property, and the CC&R’s do not stop you from turning the property into a rental property. Once you have all the chips aligned, its time to pull the trigger!
Fourth Step: Find a Renter
Congratulations! You now have your property. You can choose to live in it, but since this article is about making money, let’s move onto the next step! Finding a renter!
Some things to keep in mind when finding a renter:
- Background checks are important to help deter unwanted surprises.
- Credit Checks are key to making sure your renter is reliable and will make the payments on time.
- CC&R Rules and regulations do not stop them from moving in (e.g., HOA doesn’t allow does so now a family with dogs are not allowed to move in)
Always do your due diligence before moving in a renter; renters insurance is not required; however, it is up to you whether or not you want to make that part of your lease agreement!
Last step: Changing of the keys and maintenance
Remember when your toilet broke down, and you called your landlord to fix it, so they send a plumber out to your condo/home?
This will be the same for you. YOU are responsible for your home and its maintenance, so always make sure to fix problems as soon as they occur. Usually, having a plumber and General contractor in your contact list is the best move!
Investing in real estate is a lot of fun and a wonderful journey! It’s one of the biggest steps to financial freedom, and now you know the steps it takes to make it happen! I hope in this article you learned not only the steps but also that it’s easy, and anyone with the right mindset can make it happen!
Contact 770 Capital Investment Group to take the first step in the right direction!