My guide on how to invest in real-estate.
In my line of business I have seen so many errors when people invest in real estate, especially for the first time. This guide is designed primarily for new investors, but works just as well for a seasoned investor.
When I purchased my first property, I made a number of mistakes. To begin with, I did not have stellar credit. When I was young, nobody told me about credit. I had a credit card but at 18 I just assumed it was free money. I maxxed it out and never paid it back. It showed up negatively on my credit, but I just figured - who needs credit anyway?
A few short years later when I went to purchase my first house I discovered rather quickly that credit was paramount in this business. My 600 credit score was not going to cut it. Before you invest in real estate make sure you have solid credit. These days a score above 650 and ideally above 700 is preferred. Use any of the credit check services to verify your credit before proceeding onto your first deal.
Get an amazing mortgage broker. This is one of the most crucial elements to a successful purchase. You can visit your local bank or use a broker. I've had success at both, but just be sure that they have been doing it long enough to know the ins and outs of the business.
Get your hands dirty! Don't be afraid to check out the properties you are interested in. I like to get on my bicycle and cruise around the neighborhood to look and listen for problems before I purchase. I might ride by in the morning at 7am, again at noon, around dinner time, and even at 2 in the morning. Some people say, "what are you doing riding your bike at 2am in a strange neighborhood?". The answer is simple. If I don't feel confident riding my bike at 2AM, why would I feel confident owning a $200,000 house in the same neighborhood?
OK - the deal's done and you own the property. Congratulations, you are now a landlord. You don't have to be a legal wizard or a CPA to be a landlord, but you should know both of them. I recommend organizing your tenants and properties into an application like Rentec Direct which will keep your books in order and tenants paid on time. Consider setting your tenants up on ACH to automate the payments, and be sure to screen your tenants well. I always check criminal, credit, and evictions. If you don't have agreements already, check out ez landlord forms which has them all.
Cindy "Angel" Primrose
Grand Rapids, MI