Marianne Belanger's Blog
The methods for getting started in real estate investing range from strategies that are active to others that are more passive. Many methods fall in between those extremes but all have their own level of associated risk. Here we'll touch on some of the lower risk ways to get started with property investment.
Buy, Remodel, Rent, Refinance, Repeat is a method that is also known as BRRR. With careful planning and execution, it can be an effective way to start building a portfolio of rental properties without using all your cash.
The BRRR method basically involves purchasing a property that needs improvements and is being sold for under its potential value. First, use short-term financing or cash to buy the property.
Once you've remodeled, rented it out and otherwise stabilized it as an income generator, you refinance the property using a more conventional mortgage. Doing so could free up most of the original capital for your next purchase.
2. Own Then Rent
This strategy involves choosing a house that works as your home and as an investment rental property in the future. There are numerous advantages to adopting this method.
You can improve and remodel the home while it accrues equity. Choosing projects that will return the most return on your investment is crucial.
Once you've done so, you can level up to another home. After doing this a few times, you can build up a small real estate portfolio.
3. Own and Rent Out
A home such as a duplex, triplex or fourplex has built-in investment and profit potential. You live in one of the units while renting out the others. This strategy also works if you purchase a home with a guest house, mother-in-law apartment or a basement with a separate entrance.
Using this strategy provides you with valuable time to build experience as a landlord or property manager. In this scenario, you'll live in close proximity to your renters which could be an adjustment if you're moving from a single-family residence.
4. Live in Then Flip
This strategy is a variation on the others already listed. Once you purchase a house, move in and start making improvements. Wait a minimum of two years and then sell it for a profit.
Be sure to follow the IRS rules regarding profits from home sales. By doing so, you won't be subject to the taxes on that money up to $250,000 for individuals and $500,000 for couples who file jointly.
This list is by no means an inclusive one. It does, however, provide you with actionable steps you can take to get started as a real estate investor.
If possible, it helps to maintain a flexible deadline as you navigate the homebuying journey. Because if you have a tight deadline in place, you risk making a rash homebuying decision. And as a result, you may pay too much to acquire a home. Perhaps even worse, you risk purchasing a house that fails to match your expectations.
As you prepare to kick off your homebuying quest, it helps to plan ahead. Fortunately, there are lots of things you can do to streamline your home search and discover your ideal residence in no time at all.
Now, let's take a look at three tips to help you accelerate the homebuying journey.
1. Prepare Homebuying Criteria
If you know you want to buy a home, you should put together property buying criteria. That way, you can enter the housing market with a plan in hand to acquire your dream residence.
To establish homebuying criteria, think about where you want to reside. For instance, if you want a home close to parks and other family-friendly attractions, you should hone your house search accordingly. On the other hand, if you need a house that offers quick, easy access to family members, you should search for a home near these relatives.
Consider the features you want to find in your dream home, too. If you make a list of home must-haves, you can focus exclusively on houses that have the features you require.
2. Establish a Budget
Usually, it is beneficial to begin a home search with a mortgage at your disposal. If you get pre-approved for a mortgage, you will know how much you can spend on a house. Then, you can search for houses that won't force you to exceed your budget.
To obtain a mortgage, you should meet with a variety of banks and credit unions. These financial institutions can teach you everything you need to know about home financing. Plus, they can help you make an informed mortgage selection.
3. Hire a Real Estate Agent
With a real estate agent at your side, you should have no trouble performing a successful home search.
A real estate agent is devoted to homebuyers' success, and as such, will do what it takes to help you achieve your desired results. For instance, if you want to buy an affordable house in a small town, a real estate agent will make it simple for you to do just that. Or, if you want to purchase a home near your office in the city, a real estate agent will craft a custom homebuying plan so you can accomplish your goal.
Furthermore, a real estate agent takes the guesswork out of buying a house. If you ever have homebuying concerns or questions, a real estate agent will respond to them – without exception.
Want to enjoy a fast, stress-free homebuying experience? Take advantage of the aforementioned tips, and you may be better equipped than ever before to seamlessly navigate the homebuying journey.
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A home showing will help you gain the insights you need to make an informed decision about a house purchase. At the same time, you may have many concerns about whether a residence is right for you, even after you complete a home showing.
Ultimately, there are many questions to consider after you finish a house showing to ensure you can make the right choice about a residence, and these include:
1. How did I feel as I walked through a home?
Oftentimes, homebuyers try to envision what life may be like if they purchase a residence. As these buyers walk through a house during a showing, it sometimes can be simple to imagine the possibilities if you buy this residence. On the other hand, it may be tough to envision a future in a particular home if a house fails to match or exceed your expectations.
Think about how you felt as you explored each room in a house during a showing. If you left a home showing with a good feeling about a residence, it may be beneficial to submit an offer or set up a follow-up showing. Conversely, if a home showing left you feeling uncomfortable with a residence, you may want to continue your search for your dream house.
2. Are there any major issues with a home?
Generally, it is a good idea to ask lots of questions about a house during a showing. This will enable you to learn about the condition of a home and determine whether major repairs are necessary.
A home in need of significant upgrades offers opportunities for homebuyers who are looking for a "fixer-upper" house. In fact, if you submit an offer on a fixer-upper home, you may be able to perform assorted repairs to enhance a house's condition and value.
Comparatively, if you are unwilling to perform substantial home upgrades, there is no need to worry. You can always forego submitting an offer on a house after a showing, and by doing so, continue your pursuit for your ideal home.
3. Is a home a viable long-term investment?
As a homebuyer, it is important to find a house that will serve you well both now and in the future. Because if you fail to do so, you risk purchasing a house that will only decline in value in the years to come.
If you feel that a home is a viable long-term investment following a showing, you may want to submit an offer to acquire this residence. Then, if a seller accepts your offer, you can conduct a home inspection and move forward in the homebuying process.
Lastly, as you consider what to do after a home showing, you may want to collaborate with a real estate agent. This housing market professional can help you evaluate the pros and cons of submitting an offer on a particular residence. Perhaps best of all, a real estate agent will offer expert tips to ensure you can find your dream residence in no time at all.
If you buy or sell a home, it is normal to expect negotiations after an initial offer is submitted. However, differentiating between a "fair" counter proposal and an exorbitant offer sometimes can be difficult.
Lucky for you, we're here to help homebuyers and home sellers submit a successful counter offer at any time.
Now, let's take a look at three best practices to help you create a successful counter proposal.
1. Consider Your Counterpart's Perspective
If you are buying a home, consider the seller's perspective. Or, if you're selling a house, evaluate the buyer's perspective. In both scenarios, you can gain insights into what your counterpart might be thinking and tailor your counter offer accordingly.
For example, if a house has been available for several weeks or months, a homebuyer should consider this information as he or she preps a counter proposal. By doing so, a homebuyer can weigh the pros and cons of waiting out a buyer's market and craft an effective counter offer.
On the other hand, if a home seller has several offers in hand, this seller may want to consider submitting a counter offer that matches or exceeds a house's initial asking price. With a seller's market in place, a home seller should have no trouble stirring up plenty of interest in a home, even if a buyer rejects a counter proposal.
2. Evaluate the Housing Market
Take a look at the prices of available houses in your city or town. This housing market data can help you differentiate between a buyer's and seller's market – something that may prove to be exceedingly valuable as you put together a counter offer.
Also, examine the prices of recently sold houses that are similar to the home that you want to buy or sell. By leveraging this housing market data, you can evaluate the prices of similar properties and boost your chances of submitting a competitive counter proposal.
3. Consult with a Real Estate Agent
If you're struggling to create a fair counter offer, it certainly helps to consult with a real estate agent.
Ultimately, a real estate agent is committed to helping homebuyers and home sellers achieve their respective goals. This housing market professional can provide a wealth of housing market data to help a homebuyer or home seller craft a viable offer. Furthermore, a real estate agent is happy to provide honest, unbiased home offer recommendations, ensuring both buyers and sellers can make informed decisions.
Let's not forget about the support that a real estate agent provides throughout the homebuying and home selling journey, either. A real estate agent will be ready to respond to a buyer's or seller's questions without delay. Plus, this housing market professional will go above and beyond the call of duty to ensure all parties involved in a home sale enjoy a seamless experience.
Ready to negotiate a counter offer? Use the aforementioned best practices, and you can quickly and effortlessly create a successful counter proposal.