Being a real estate investor is an appealing idea for many people. It can seem like a fun and lucrative way to make some extra money. But, of course, it’s not quite as simple as that. Before you sink money into an investment property, you need to know what your ultimate goal is:Do you want to...
- Build wealth?
- Have something to keep you occupied during retirement?
- Be a landlord?
- Develop a steady monthly income?
No matter how lofty or practical your goals, the reality is that first you must determine whether or not you can afford to reach them. While you don’t necessarily need a lot of your own cash to invest, you do need to be able to borrow it.
Before you start looking at properties, it's crucial to examine both the financial and personal sides of owning investment property.
The Financial Side
You must answer some hard questions about your own finances first. What does your overall financial picture look like? Are you financially fit? What’s your credit score?
Start by getting a copy of your credit report and review it carefully to make sure all the information is accurate. You can do this two ways. By law, you're entitled to a free copy of your credit report from each of the three major credit reporting bureaus (Experian, Equifax, and TransUnion). Visit AnnualCreditReport.com to get your reports.
If you need some help understanding your report, we can also pull your credit report for free and help you interpret it. We can answer any questions you may have and show you areas where you may need to improve before you attempt investing in real estate. We’ll also explain what your credit score means and how it will affect the interest rate for which you might qualify. Stop by one of our branches, give us a call at 800-656-4328, or visit us here to set up an in-person or telephone review. P.S. The credit report and score review is completely free!
Now ask yourself if the income you hope to generate through property investing will meet your monthly expenses or if it will it supplement your current income? Your answer might affect how you approach and handle an investment.
The Personal Side
Investing in real estate is a major long-term undertaking so you have to be fully committed to the endeavor. If you’re in a relationship, is your partner supportive? Are there any other family members who will be affected? Are you really ready to take on the additional responsibility of owning commercial property?
If you decide you’re a good candidate to invest and you make the leap, you could find yourself owning multiple properties and realizing significant monthly income. Plus you’ll also benefit from the tax advantages of being able to deduct not just the mortgage interest, but also the building’s depreciation, repair costs, and more. Once again, done correctly, investing in property can be financially rewarding...not to mention an enjoyable venture that keeps you busy.
If you're considering investment property ownership and are wondering what's involved in financing an investment property, download our free eBook today.
Others are reading: