Do you wish to invest in real estate but lack the knowledge needed to begin the process? Billionaire Andrew Carnegie is famously quoted as saying that 90 percent of millionaires got their fortunes from investing in real estate. It’s no secret that investing in real estate is a viable way to generate wealth. If you are interested in profiting from real estate investing, the following tips will help you get started.
Research Your Local Market
The main objective is to locate properties that are priced below the value of the market and are in need of repairs. In the real estate industry, they refer to these properties as “handyman specials.”
Determine Funding Options
If you are looking to invest, you are unable to get approved for a conventional loan. If you are not going to purchase the property with your own cash, you will have to find what is referred to as a “hard money lender.” Hard money lenders typically charge higher interest rates and have shorter pay-back terms. Use a mortgage estimator to figure out what your potential monthly payments will be.
In regards to the down payment, ten percent is usually the lowest down payment that you will pay as an investor. There are times when you will find a seller that will allow you to purchase a property with no money down.
Enter Into a Purchase Agreement
Once you figure out your funding solution, you are ready to enter into a purchase agreement for the subject property. Once you and the seller agree upon terms and a sales price, you can execute the sales contract with your signatures. The next phase in the process is the appraisal and title search.
Appraisal and Title Work
The appraisal determines if the property is indeed worth the price it is being sold for—or the after-repair value (ARV). An appraiser is paid to visit the property and conduct a thorough evaluation. The appraisal report is based primarily on the condition of the property, and the comparison of similar properties recently sold in the area.
A title search is performed by a real estate attorney or a title company (depending on the state). The title search assures that the property is free of encumbrances and solely owned by the seller.
Once the property is appraised and the title work is completed, the attorney or title company will schedule the closing. At the closing, you will sign the closing documentation and receive the keys to your new home. After taking possession of the property, dedicate your nights and weekends to rehabbing the home.
Now that you have a more profound understanding of the real estate investment process, you can proceed with confidence. You now possess the information needed to begin your life as a real estate investor. Once you successfully complete your first deal, you can repeat the process. By multiplying your efforts, you will be able to quickly begin generating wealth as a real estate investor.
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