If you’ve been thinking about investing in real estate, here’s what you need to do before heading out to shop for properties.
1. Create a financing plan
- What’s your current income?
- How much do you have in savings?
- Can you get a mortgage loan?
- Will you pay in cash?
2. Keep Your Credit Healthy
- Request a copy of your credit report.
- Dispute any errors.
- Pay all your bills on time.
- Pay down high-interest debt first.
- Be strategic about opening or canceling lines of credit.
3. Get Pre-approved for a Mortgage
- You’ll need the following in order:
- Personal documents.
- Tax returns.
- Proof of income.
- Proof of assets.
- Summary of debt.
4. Do Your Homework
- Compare different mortgages from different lenders.
- What interest rates are they offering?
- How much will they lend you?
- Check-in with your current bank and others, too.
5. Establish Liquid Funds
- You’re going to need some cash on hand to buy, if only for a down payment and closing costs.
- Don’t forget about renovations and repairs.
- If you’re flipping a house, you’ll need to consider your monthly cash flow.
- Secure a backup source of cash.