Great Ideas to Grow Wealth in Real Estate
Do you rent? Want a better financial picture? Looking to build equity? Read on.
Fix or Build Your Credit.
If you've got some credit issues, a great way to fix these issues quickly is to take a percentage or fixed dollar amount out of every paycheck to address them. Put $10 a week against your Visa bill, or 5% of your monthly income towards your student loans. Getting into a habit like that will have a terrific impact on your credit score.
Save Some Loot.
Once your score is where you need it to be, start putting that money into a bank account, or use your now-paid off credit card for buying expenses. Something else to consider is the Bank of Mom and Dad - if you're a little short on cash, ask your parents or in-laws to fill in the gaps, if at all possible.
Apply for a Government-Backed Loan.
The USDA, FHA and VA all offer low-to-no down payment loans. Contact Wanda French at Academy Mortgage, or Kim Magoon Somaini at HomeBridge Financial Services for more details - you'll be glad you did.
A letter of pre-approval means you can act quickly when you find the right house. It's like another arrow in your quiver that you can use against rival bidders - imagine you find the right house and someone else makes an offer that get accepted while you're talking to Wanda or Kim! It happens, and it's no fun. That's your house!
Hire a Realtor!
Okay, we're biased. Of course we'd love it if you chose to work with us, but even if you go elsewhere, remember to have a Realtor represent you - as a buyer it will literally cost you $0. We get paid only after a home sells, and it comes out of the seller's end, not yours.
Consider a Duplex/ Multi-Family.
The beauty of this is you can rent out one half and live in the other - someone else pays your mortgage! Or, you make double payments every month and get it paid off quickly. Imagine what you could do with that kind of financial freedom!
Don't Be Afraid of a Fixer-Upper.
FHA offers a rehab loan called a 203k, which can help with cosmetic repairs, appliance replacement, mold, a new roof - whatever you may need! And the beauty is the expense of the repairs gets rolled into your monthly payment (which your tenant pays for)!
It Doesn't Have to be Perfect.
Yes, we've all got big ideas for the castle we'll live in when we win the lottery, but chances are excellent you'll have to compromise on something you want. Make a list of two or three things you can't live without - a second bathroom, for example - and look within that criteria.
Get an Inspection!
For your own sake, NEVER buy a house that hasn't been inspected! This will happen after you make an offer, and based on the inspection report, you'll be able to either re-negotiate or back out of the contract all together.
It's always a little heartbreaking when a beautiful home falls into disrepair. Now that you're in your home, it's wise to think of it as a plant - water it and give it sunshine and it will grow and bear fruit. Stick it in a dark closet and it will wither. In other words, stay up-to-date on repairs, and put a little sweat into it - refurbish the kitchen with your tax return, for example.
As with all investments, the longer you have it, the more profitable it becomes. Things happen, of course, and one never knows what the future might hold. This is why a duplex is a wise investment, because maybe a divorce is looming - both of you move out and rent your former side and split the monthly profits! This will avoid a nasty property battle and give you both a little alimony.
Because of your wise investments and real estate prowess (and with the help of your tenants), you've been able to stay on top of your mortgage payments and save up some money. Invest it! Look around for another multi-family unit, or a small single-family home you could rent out to a nice family or couple. Buy low and rent high! A $125,000 home with a 30-year mortgage equals a monthly payment of around $1,000. Rent it for $1,500 or more and watch your bank account swell!
Hire a Property Manager.
Property managers are worth their weight in gold. They'll do repairs, collect rents, and deal with tenant issues all for a cut of the rent they collect. They'll definitely save you from headaches.
Ready to Retire?
You've been a savvy real estate investor all your life and want to retire - time to sell! Put everything you've got up on the market all at the same time and head to paradise! Hire a Realtor to market, negotiate, and set showing appointments and you can leave town before you even sell! Use the tenant's' rent to buy daiquiris on the beach while you wait for the big checks to come rolling in. After all, you're smart - you've built equity and taken good care of your properties - they'll sell fast!