What is the best way to start investing? How did you finance your first deal? Hard Money? Bank Loan?
@Jimmy Morgan the first thing to do is determine what your goals are. Are you looking to rehab homes? Buy for cash flow? Wholesale? After that you can figure out financing components but they will vary based on your strategy.
@Jimmy Morgan since you are talking about financing here I might assume you mean 1-4 family properties? If that's not the case then please clarify as it would change this response.
But in order to start out in real estate investing I would encourage you to:
- Have 6 months of bills saved up. This is a pretty standard goal that any financial planner/advisor will tell you to do no matter what you do. You'll likely need it if you are buying properties.
- Place a priority on purchasing your own home first. Living in a safe, stable environment is not only good for your family unit but it also removes YOU from paying rent. Meaning, you own a property and are building equity. An interest rate on your primary home is lower than an investment property too. Lot's of down payment assistance programs are available and you can keep the property as a rental later. Family (and yourself) is more of a priority than real estate investing. It will help later.
Now, assuming you have those two steps in place now it becomes REALLY easy to invest. If you are buying off market properties it is likely that you will need some time of money that allows you to close quickly. Hard Money is ONE example of this. You purchase, rehab, then sell. Now, the acquistion loans often will lend up to a % of the property....usually 75%. So if you find a great deal, but you need 80%...then that's what that 6 months of savings is for. Also, many HML want to know you own your own property. They cannot lend on primary homes. So if you already own a primary home...then it's easier for them to assume you aren't using their money FOR a primary home. They can get in a lot of trouble if they lend on a primary home. So if there is zero risk to them, since you already live in one, then they feel better.
If you are buying and holding, then you would also want to be prequalified with a PERMANENT lender. It's usually free and that will tell you what your payments will be so you can calculate things like cash flow, etc.
I hope that some of this information was helpful. Good luck!
@Andrew Postell thank you for this! Really appreciate it!