Nowadays people from various industries are looking to expand their portfolios by investing in properties. Real estate investing is a great opportunity to do just that, and I recommend it to those ready and willing to make the commitment. However, before purchasing any properties, consider the following 5 ways to prepare.
Make a Plan
Never forget that this is a business. This means you should treat it accordingly. Make sure that you do your research and come up with a solid business plan that outlines your goals over the next 10 years in 2 to 3 year phases. Your business plan should not only identify the short and long-term goals, but should share how you intend to accomplish these.
Know Your Credit
At the outset of this exciting new venture, make sure that you are armed with as much information as possible. In this case, make sure that you look up your own credit report to determine your eligibility and ability to finance a property. Lenders usually demand a score of 700 or higher FICO scores from those looking to purchase investment property. In addition to procuring your FICO score, calculate your debt vs monthly income ratio . If it is currently too high, you may want to reconsider your budget, and start to pay down any outstanding debts or loans.
Do Your Research
No need to stay too close to home when considering properties to invest in. Of course there are advantages to living near your potential investment, but try not to limit your options with this mindset.
Connect with the experts
Talk to an accredited mortgage broker in your area. Ask a certified realtor for recommendations. Join a real estate club, take your friends that work in real estate out to lunch, join online forums. However you choose to engage with the real estate community, find a way to get involved. It’s critical that you speak with people currently in the industry, so that you can get a better sense of what it is you are committing too.
Diversify your sources of purchase:
Consider mixing up the means through which you purchase properties. Instead of launching your search through just one venue, look into multiple avenues. Real estate auctions, word of mouth and more traditional multi-listing sites are a great place to start. Use your network and some creativity!