There are many ways to get started investing in real estate. It is often assumed that the only route involves putting 20% down on a 250k home plus closing costs which means you must save over 60k before taking the first step. This makes it impossible for a first-time investor to make that first step into the market in a reasonable time frame. There are many more creative solutions though that allows you to get started without having a large number of liquid funds.
Some methods include living in your first investment property which allows you to put down less than 3.5%; using a Roth IRA to finance your first house; or partnering with another first-time investor or veteran investor to allow you to invest as little or as much as you would like your first time. There are also excellent investment properties out there for under 100k that can offer a significant return on investment.
Bad Time to Buy
When beginning your investment journey, you should always be making decisions that are focused on long-term goals. Yes, the real estate market does go through major cycles with the housing market losing significant value at times while also going through periods of extreme growth. These cycles should have minimal impact on your decision when you focus on cash flow. As long as you keep your capital in real estate, the macroeconomic trends do not impact you because if your investment loses value, so do all other houses in the market. This allows you to sell and buy within a short period of time without losing capital because of the market cycles.
Once you get past all of the major concerns, this is often the concern that keeps a first-time investor from making the final step. Yes, there are bad tenants out there and chances are you have had investors tell you about their bad experiences. But this definitely falls into the area of over-estimated risk. No one talks about the good tenants but the bad tenants always make for a good story. The key here is to minimize the risk by placing restrictions such as no smoking and no pets and properly vetting tenants. Since the average first-time investor does not have experience in this area, this is where a Realtor that is familiar with the process and the laws in your area and is willing to go the extra mile can be a huge advantage.
Now is the Time!
At a minimum, now is the time to start the conversation. Even if you do not have a dime in your bank account to put toward a property, starting the conversation with a Realtor and Mortgage Broker can help you start building the confidence to take that step when you have overcome your own hurdles. Get started today!
If you do not have a Realtor, feel free to contact me and if you are not in my area I can help you find a Realtor that is a good fit for your needs!
Ashley White – 321.332.3794 – Ashley.White@kw.com – Greater Orlando Realtor