Have you found your perfect piece of property?
Convinced that this is one that is going to set you down the path towards financial freedom and real estate success?
When you’re ready to start venturing down the investment path and you found your first property, here are a few steps that you should take immediately.
What You Can Organize Personally
Organize your finances
Make sure all of your financial information is located in one place. This should include how much money you are making, how much you are spending, and how much you are investing. This will determine if you’re even prepared to purchase your first property or not. Not sure where to start to keep everything organized? Thankfully, there are many online tools that help you keep things safe and secure. Sites such as mint.com help personal finances become clearer and are great tools for savvy investors.
Analyze your expenses
Now that you’ve organized all of your money, take a closer look at what you’re spending it on. Create categories for your expenses and see where areas are the heaviest and the lightest. Additionally, you’ll want to make sure that your cash flow is positive. If you notice that it is the opposite, you may want to reconsider purchasing this property right now. Make sure your everyday spending is in a stable place, before purchasing your first investment home.
Focus on a location
A serious investor has not only narrowed down what type of property they want to purchase but where they want to settle down. Figuring out what neighborhood you’ll be investing in will help you align yourself with professionals and help that is more available and familiar with the area.
Go over your credit score
As you probably already know, you can check your credit score for free once a year. If you haven’t done it yet this year before you purchase a home is a good time to make sure everything looks in order. You’ll also want to know where your credit stands before you go looking for a loan, as it will be a large factor in how much or little you receive.
Get in touch with an agent
There is no right or wrong way to jump into the real estate venture, but it is always easier with an agent by your side. If you are a true beginner, there is a lot of overwhelming information to take in. Having a professional by your side that knows the in’s and out’s of the process will help ease your worries. Give us a call at Own It Detroit if you need help working through this area!
However, if you’re looking to purchase your first property, chances are you will need a loan.
Review these steps to help get your paperwork and finances in order to successfully navigate through a home loan process.
Paperwork & Finances You'll Need
Prove history of payments
– When you go to apply for a loan, along with your credit score and income, the lender is going to want to see that you have a solid history of consistent payments. This includes paying off credit cards, rent, mortgages, and utilities. Make sure to bring these items along with you to help speed up this process.
Organize tax documents
– All legal and tax documents should be gathered up before you purchase your first investment home. Below is a list of what will definitely be required if you are looking into financing.
- Tax returns from the past 3 years
- Contact information about your landlord of mortgage lender
- Utility bills
- Recent pay stubs
- Statements from your bank accounts and credit cards
- Government identification (i.e., drivers license and social security card)
If you’re serious about your real estate venture then you’ll definitely need a pre-qualified lender from a bank. This is an informal letter that states you are eligible and will mostly likely receive a mortgage from the bank, if you request to utilize them. This can give you serious financial advantage when looking to purchase a home or making offers.
Set aside some cash
Many first time real estate purchasers will need to provide an investment deal with some cash. This may even be necessary if you’re only looking to make an offer. This is called ‘earnest money’ and is similar to a security deposit. The next step after putting down earnest money will be to formally secure a loan for a mortgage. The earnest money is then used as a down payment for the home, if you move forward with the process.
Stay in the loop
If you’re going to become a serious real estate mogul, you’ll need to constantly stay in the loop and be aware of what is happening in your investment area. If you’ve partnered with an agent, they can set you up with an MLS alert for your desired area, and it will notify you immediately when properties become available.
While these steps are only just a few of the necessary requirements to successfully and thoroughly venture in to the real estate market, we promise that if you follow these guidelines you’ll be 10 steps ahead of your competition.