How To Prepare To Buy Your First Real Estate Investment?

How To Prepare To Buy Your First Real Estate Investment?

Alright friends, so, I know you’re new
to real estate investing and the biggest thing that’s on most of your minds is,
“How do i best prepare to buy my very first real estate investment property?” Hey friends, Stephen Michael Miller here
and you’ve got questions, we’ve got answers. So, i’m going to jump right in here.
I’ve got a question here from Eric and Eric said, “Do I need a full-time job to
get started in real estate investing?” And the answer is, it depends. You don’t
necessarily need a full-time job to get started investing but you do need income
and you do need “know-how” in some way shape or form. Whether that’s from you or
from a partner, we’ll discuss some of that as well. But I want to talk about
how to prepare to really buy a property. So, hopefully I’ll answer a lot of your
questions here Eric in and as I go through how to prepare to buy real
estate. Now, I know we also had some comments from Tahoe, he, Tahoe Tuck or
Touche, something like that. Alright, so, we got a comment from you and you were
asking, “Hey, you know, what if I put $3500 down, what if I put
$10,000 down on a property? What do I need in terms of credit?” You
know, you’re just looking for some more information. I thought these kind of two
went together so, we decided to kind of sandwich them in in this one video and
give you a good response. So, first of all, I want to talk about what you need to do
to prepare. Now, couple of things and the very first thing is, in order to do real
estate on your own, you’re going to need money, right? You can’t do real estate on
your own without money. Now, I know we often talk about doing real estate with
no money, no credit, all those things but when you’re doing real estate with no
money and no credit, what we’re referencing is none of your
own money and credit and using partnering as that ability to bring
those assets into your world, right? So, I’m talking about right now, doing moneys…Are…
Doing real estate just on your own, you need, you do need money, you need
credit of some sort as well. I would say, networking or relationships that’s
another big thing that you need to focus on and
education is also huge. So, let’s start with money. How much money do you need to
be able to buy a property? Well, if you’re buying a single-family residence, right?
Just a single-family home and you’re buying it as a primary residence, then
you need less than you would need for an investment property. For a primary
residence, you’re looking at typically somewhere between a 3 to 5%
down payment. Now depending on where you live and what your average
purchase price of the home is, that will fluctuate a little bit. But you’re
typically right in a 3 to 5% range that you need as a down
payment for that property. If you’re buying an investment property then
you’re looking at a very typical 20% down payment. So, again, in your area, look
at the homes that are in your area. What the me… The the median home price is. We like to buy a little bit below the median home price and then do the math
and determine what that would look like. What would that down payment look like
for a home that you’re buying as a primary residence and what would that
look like as a home that you’re buying as an investment property. The second
thing that you need is credit. Okay, credit is really important if you’re looking to
get loans from a bank. Now, if you’re not looking to get a loan, if you have the
cash and you’re just going to buy the home outright with no loan, no mortgage, then
you can do that. But if you are looking to get a mortgage, then credit score is
one thing that they really are big on. They look at that really, really, heavily.
And for a primary residence loan, you typically need a 620 or higher. There are
some different government programs that may be able to allow you to dip below
that 620 mark but 620 is very, very typical. If you have a 620 or higher you
can qualify for a loan with with most banks and lending institutions. If you’re
looking for a… That’s for a primary residence loan. If you’re looking to do
an investment property, you’re typically looking at somewhere between a 680 or
higher, right? So, 680 on up into the 700 and
higher, you can then qualify for a investment purchase mortgage. So, you need credits. So again, we’ve gone over money, we’ve gone over credit and I want talk
about education now here for just a moment. Education is extremely important.
Knowing what you’re going into is really really important. I know
it happens all too often where people jump into real estate, they get the first
loan that they come across, you know, they buy the first home that they see because
they’re not… They aren’t really educated and what to look for. And oftentimes
that puts them behind the eight-ball, right? There they’re kind of stuck in a
situation that they don’t want to be in. So, as you’re preparing to buy, the more
education that you can get, the better you’re going to be. Education, knowledge,
truly is the foundational parts of power, right? I don’t like to say that knowledge
is power because it’s not the knowledge alone but implementing that knowledge.
But you do have to have that foundation in education, that foundation of
knowledge before you get out there and start doing things, right? This is a ready-aim-fire not a ready-fire -aim, right? You want… You want to make sure that you have
some information before you just jump in. And sometimes you can get that education
from mentors, sometimes you can get that from a course, sometimes you can get it
even from school and some from different places. But make sure that you
do have some that education. Another thing that I mentioned is before you, you
know, as you’re preparing to buy, and for someone of you, for some of you that may
be in college right now or maybe you’re even pre college right now or maybe
you’re out of college, I mean, wherever you are, networking or your
relationships is some of the most important capital you can have. You know
we talked about other people’s money and and you know your your financial capital
but relationship capital is so important. The reason why I say that is because as
you’re preparing to buy properties and as you start getting into the binding
game at some point, you’re going to get outside of your own assets and resources, right? You’re going to use up all of your money and you’re going to use up all of
your credit. This is where relationship capital comes into play. Because if you
want to continue to build a portfolio outside of your own resources, then
you’re going to need to tap into other people, other relationships and that
means that you’ve hopefully been networking for years and years and years
even meeting people. If you’re in school right now, use school, get good grades and do all your work and do all that as well. But use it for networking. I mean get
after it, join clubs, meet people, get to know them, what their needs are, serve
them. The more you can do that now, earlier on
in life, the more it’s going to pay off for you later on in life as well. And when
you’re going to find partners, when you’re going to expand and grow your
portfolio, there will be a lot of people that will want to work with you because
of the person that you’ve been and the relationships that you’ve created with
them. So, that is a huge one. Now, another part of this question was, “What if I have
$3,500 to put down on a home or what if I’ve got even $10,000 or more to put down on a home, how does that help me as I am
preparing to purchase?” Well again, depending on whether you want to buy
this home as a primary residence or as an investment purchase is going to
determine the amount of money that you’re going to need. Now, just because
you know, maybe are going to buy a primary residence, you may want to put
more money down. The more you put down. typically, the less your monthly payment
is going to be because you’re having to get less of a loan, right? Sometimes the
more money you put down, also enables you to buy a cheaper rate. Sometimes you can
buy a cheaper interest rate with more money. I will say this as well, the higher
your credit is as well… The higher your credit score is, the lower your interest
rates often are as well. So, those are correlated. So, as you’re preparing, the
better your credit can be, the better you’re going to be. The more money you can
save, of course, the better you’re going to be. And the greater the relationships
that you can forge, the better off you’re going to be. Whether you’ve got a full time
job or you’ve got a 1099 contract job or you know you own your own business, none
of that really matters, per se, as long as you’re keeping proper records and your,
you know, paying taxes. If you’re doing those things, then qualifying shouldn’t
be a problem. One of the things that you want to know… You’re going to need to know
to prepare to buy a home, is that most banks are also looking for a credit
history. And credit history, not just a credit score in and of itself because
you can have a 700 credit score but have a very short, short history of credit. So,
they are looking for a good credit history that typically means that they
want you to have a revolving line of credit of some sort. Maybe you bought a
car at some point and you’re paying that down. They’re also oftentimes looking
for multiple credit cards at least two, sometimes three is good. But at least two
different credit cards. And those are things that you can do in
establish credit, to establish credit now. So, gain that credit history. If you… If
you take all those different things that we’ve listed off right now and and you
make sure that you’re hitting all those different points, you’ll be much better
prepared to purchase a home in the future. Hey, thanks for watching. Stick
around, watch some more, click around. We’ve got lots of great videos to teach
you, so much more in real estate. And if you haven’t already, subscribe already.

24 thoughts on “How To Prepare To Buy Your First Real Estate Investment?

  1. Second comment 😎

  2. Third comment 🙂

  3. Fourth comment!

  4. The prob for us in Algeria is mentorship, college students are unaware of real estate market which means we have no idea if it works the same way it does for you.

  5. I remember when this channel had 5k subscribers . thats when I sterted watching this channel I was 18 now im 21 and got 2 duplex in Illinois chicago suburbs

  6. Question for you guys. I have a great credit score (770s) because I signed on to my mom's credit card as a registered user. But I don't have the history as you were talking about. To get a credit card, do I need credit history from something like a car lone or would the score be good enough to get started?

  7. Can you please make a video on the pros and cons of refinancing a mortgage vs. getting an equity loan/ line of credit, and which one you would recommend? Thanks

  8. How do you know what states/ cities to start investing in, and is there a bad state to just avoid?

  9. I’m 17 and when I’m 18 I have the choice of buying an apartment building that has 5 separate “rooms” would you say, now the apartments clears 17,000 a year. They want 40,000 for the building. 3/5 tenants are iffy about the rent. Now I would have to get a loan to buy because they don’t want to rent it to me or rent to own. Now once I’m stable I could kick the tenants out or change things around but I have a job that makes about 7,000 a year. Would this be a wise investment.

  10. I was just wondering if yall had ever thought about doing a small inspection house walk through and point out some details of the home that would be fine to buy with or even point out some that would be a no go. Just a thought love yalls channel! watch constantly.

  11. how do I invest in portugal?

  12. Guys I am trying to contact you since last 4 days from your website contact info. No one replies. Please get some concern on this.

  13. Can u guys make a video and or video series where u find an investment home and you show us your investment from beginning till the end???

  14. Great points Stephen. Hey, you mention getting educated as a foundation in getting started in real estate. What do you recommend a total newbie or intermediate student to real estate to start looking into? For example, does a newbie start to learn the terminology ie. what is a lease option, rent to own, etc. or is there more in-depth knowledge that a newbie would need in order to start building that foundation? What sites or books would you recommend for both a newbie and an intermediate student of real estate? TIA, love the channel, keep it coming. 🙂

  15. Kris and Stephen! Important question (at least to me). When you have one or many investment properties, when is the best time to get out??
    I’m sure it’s important to have an Exit Strategy. If the property is cash flowing nicely with or without great equity, when do you sell?? Thanks guys

  16. How can i find the actual value that a property is worth to see the diference with the price that the property is selling for.

  17. How about a video that goes through what saving should look like for someone with 4 dependents making $120,000 a year living in CA ? Cause that's me and that would be cool .

  18. I want to start investing on real state here in the Midwest 3 bedroom home for 25k the square foot is only 9 dollars, the mortgage will be 150 a month with 20-30 if I rented I can get around 500 550 . What you guys think 🤔 on this deal ???

  19. If you put down let's say 10k on a house or apartment how much could you make a month letting people live out of there

  20. My grandparents are really close to moving out of there home that they have lived in for 50+ years. And I am looking for my very first home/house, because I still live with my parents. I'm a 20 year old student and ready (I think) to buy my first house. Is it a good idea to buy the house or invest in it?

  21. Love the content

  22. Income is fuel/capital, so as of right now if your working you better be looking at it temporarily. The big bucks are on their way!

  23. 8:12 well that was funny xD

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