Are you tired of working your 9-5 job? Looking for another source of income without sitting at the office for 8 hours, 5 days a week? Real Estate Investing is a great alternative to get out of the “rat race”. Real Estate Investing can provide you with the ability to quit your 9-5 job, but there are a few steps you must take before purchasing that first property.
- Get a job
Yes I know! Let me explain. There are many benefits for having that 9-5 job that you hate. In order to receive a traditional loan from the bank you will need a two year work history at the same employment or same job industry to qualify for a mortgage. A small down payment for the property is also required unless you are a veteran from the military. A Primary residence ( home you will live in) requires a 3-3.5% down payment. An Investment Property (home you will not live in) generally requires a 20% down payment. For example, if a home was $100,000 and you were going to live in it, you would roughly have to put down only $3,000-$3,500. However, if you were to purchase it as an investment property you would have to put down roughly $20,000. Set up a plan to save 20-40% of your income on a monthly basis strictly for the down payment on your first property.
2. Build your credit
Credit is the most important requirement to get a traditional mortgage from any financial institution or credit union. The minimum credit score for a loan tends to be between 580-600. Generally, the higher credit score you have (620+) the better. The higher your score the lower your interest rate will be on a monthly basis. Keep that credit card paid off and make sure you have a solid credit score and report.
3. Get a solid Education
What type of property are you going to invest in? What are your requirements in a property? Cash on Cash return? After repair value? What city or area are you going to buy? Read some books, listen to some podcasts and webinars and learn from other investors experiences. Find a story that resonates with you that makes you say ” I want to do that” and study it. The biggest mistake new investors make is the lack of education or knowledge.
4. What’s your Why?
Do you know why your investing in real estate? No, what’s the real reason? I am not talking about the generic answers; ” I want tax benefits”, ” Real Estate is better than the stock market”, ” I will get a better return on my money”. Find that emotional motivating reason why you want to invest in real estate. Maybe, its to spend more time with your children. Be able to go in your boss office and say the words ” I quit”. Maybe be able to travel the world six months out of the year. Find your why! Having a strong emotional why will navigate you through future adversity and obstacles you must overcome to achieve your desired lifestyle.
5. Business plan
How do you plan on building your portfolio? How many properties will you purchase every year? What is your end goal? $5,000 a month? $10,000 a month? It is important to have a written business plan on how you will grow your portfolio and scale your real estate business. Take the time to write down where you are today and where you want to be 1 year, 5 years even 10 years from today. It may sound insane but it is important. Document a plan of what you want to accomplish and how you will take action every single day to achieve that end goal!
Talking Real Estate Investing in Single Family Homes! 