SS175: Strategies for Transitioning from Renter to Real Estate Investor

ss175-strategies-for-transitioning-from-renter-to-real-estate-investor

Many renters dream of becoming a real estate investor. In this episode, Charles discusses the easiest ways for renters to become real estate investors.

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Talking Points:

  • Transitioning from renter to real estate investor requires planning, financial management, and a strategic approach. Over the years, I have spoken to many renters who wish to become real estate investors, and I want to outline some strategies that I have suggested to others and utilized myself.
    • Set clear goals. These goals can be financial, but most importantly, identify what you are really trying to accomplish. If you want to house hack a property, maybe your goal is to purchase a 3-4-unit property in a certain area to both live in and rent out in the next 12 months.
    • Educate yourself on different real estate investing strategies, and ultimately, select the one you feel will best help you achieve your goals. There are many real estate investment strategies, but depending on your goals, you must narrow this down to one strategy you can now focus on. I would not overcomplicate this. Some new real estate investors focus on overly complex strategies where you are really just trying to purchase your first property and learn the business.
    • Evaluate and improve your personal finances. No matter your financial situation, pull a credit report on yourself and list out all of your bank accounts, balances, and other assets you may own. List any debts you owe and cross-reference that with your credit report; ensure you are not missing any accounts, debts, or liabilities.
      • Clear up any debts that may drag down your credit report. Paying off any credit card debt is a must, and it will dramatically increase your score. When I purchased my first couple of properties, I had student loan debt but no credit card debt or car loans.
      • Once your debts have been paid off, how much money is available for a down payment on a property, closing costs, repairs, and a reserve fund? I would open a separate savings account that you can add to this regularly that will be used specifically for buying property.
      • Create a budget that you can stick to. A budget will assist you with paying off debt and saving money to invest. The budget will list all of your living expenses and how much you can save while showing you where you can temporarily cut back to save more or pay off more debt.
    • Once your personal finances are in order, I would speak to a mortgage broker and tell them what you are trying to do. They will review your personal finances with you and tell you what you need to do to be approved for a mortgage, along with how much property you can afford.
      • If your first property will be a 100% investment property, meaning you will not be living there, you want to make sure you are speaking with a mortgage broker who focuses on investment properties.
      • If you will be living in the property, ask the mortgage broker about all possible programs offered for first-time home buyers in your market. I would also do some research yourself beforehand and then ask them about what you have found.
    • Start researching properties in your target market. Analyze deals and drive the markets and properties to gain more insight. Start interviewing real estate agents, and find one you want to work with. Get some insurance quotes on properties you are reviewing and track the current mortgage rates so you have an idea of your expenses on the new property. Also, speak to the tax assessor and ask them how to calculate the new property taxes on a property after it is purchased.
      • Remember that you need money for the down payment, closing costs, a reserve, and any repairs that may be required at the property. I highly suggest that new property owners purchase a property with little to no deferred maintenance. It will limit the amount of money you need to set aside while making the process of purchasing your property and renting it much easier.
    • One of the best strategies for becoming a real estate investor is house hacking (a strategy I used to get started). In short, this strategy involves purchasing a 2–4-unit property (usually as a first-time home buyer), living in one unit, and renting out the others. It is one of the easiest ways to become a landlord I explained this strategy more in-depth in episodes SS41 and SS159.

Transcript:

Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing strategies for transitioning from renter to real estate investor.

Charles:
Transitioning from renter to real estate investor requires planning, financial management, and a strategic approach. Over the years, I’ve spoken to many renters who wish to become real estate investors, and I want to outline some strategies that I’ve suggested to others while also utilizing myself. Number one is set clear goals. Now, these goals can be financial, but most importantly, identify what you’re really trying to accomplish. If you want a house act of property, maybe your goal is to purchase a three to four unit property in a certain area to both live in and rent out in the next 12 months. Two is educate yourself on different real estate investing strategies and ultimately select the one that you feel will best help you achieve your goals.

Charles:
There are many real estate investment strategies out there, but depending on your goals, you must narrow this down to one strategy you can now focus on. I would not overcomplicate this. Some new real estate investors focus on overly complex strategies where you are really just trying to purchase your first property and learn the business. Three is evaluate and improve your personal finances. No matter your financial situation. Pull credit report on yourself and list out all your bank accounts, balances and other assets you may own. List any debts you owe and cross-Reference that with your credit report, ensuring you are not missing any accounts, debts, or liabilities. Clear up any debts that may drag down your credit report. Paying off any credit card debt is a must and it will dramatically increase your score. When I purchase my first couple of properties, I had student loan debt, but I had no credit card debt and no car loans.

Charles:
Now, once your debts have been paid off, how much money is available for a down payment on a property closing costs repairs, a reserve fund? I would open a separate savings account that you can add to this regularly that will be used specifically for buying property. Create a budget that you can stick to. A budget will assist you with paying off debt and saving money to invest. The budget will list all of your LI Living expenses and how much you can save while showing you where you can temporarily cut back to save more or pay off more debt. Four, once your personal finances are in order, I would speak to a mortgage broker and tell them what you were trying to do. They’ll review your personal finances with you and tell you what you need to do to be approved for a mortgage, along with how much property you can afford.

Charles:
If you, this is your first property and it’s gonna be a hundred percent investment property, meaning you will not be living there. You wanna make sure you’re speaking with a mortgage broker that focuses on investment properties and financing them. If you will be living the property, ask the mortgage broker about all possible programs offered for first time home buyers in your market. I would also do some research yourself beforehand and then ask them about what you have found. Five is start researching properties in your target market, analyze deals, drive the markets and properties to gain more insight and start interviewing real estate agents and find one you can work with. Get some insurance quotes on properties you are reviewing and track the current mortgage rate so you have an idea of your expenses on the new property. Also, speak to the tax assessor and ask them how to calculate the new property taxes on property after it’s purchased.

Charles:
Remember that you need money for the down payment, closing costs of reserve, and any repairs that will be required on the property. I would highly suggest that the new property owners purchase a property with little to no deferred maintenance and will limit the amount of money you need to set aside while making the process of purchasing a property and renting out a whole lot easier. Now, one of the best strategies for becoming a real estate investing is house hacking a strategy I use to get started. In short, the strategy involves purchasing a two to 40 unit property, usually as a first time home buyer, living in one unit and renting out the others. It is one of the easiest ways to become a landlord, and I explain the strategy in more depth than episodes. SS 41 and SS 1 59. So thank you so much for listening.

Charles:
I hope you enjoyed. Please remember to rate, review, subscribe, submit comments and potential show topics@globalinvestorspodcast.com. If you’re interested in actively investing in real estate, please check out our courses and mentoring programs@syndicationsuperstars.com. That is syndication superstars.com. Look forward to two more episodes next week. See you then.

Charles:
Have you always wanted to invest in real estate, but didn’t have the time, didn’t know where to find the deals, couldn’t get the funding and didn’t want tenants calling you. Since 2006, I’ve been buying income producing properties and great locations that provide us with consistent passive income. While we wait for appreciation in the future and take advantage of tax laws while we’re waiting and unlike your financial advisor, we invest alongside our investors in every property we purchase. Check out to investwithharborside.com. If you like the idea of investing real estate, if you like the idea of passive income partner with us at investwithharborside.com, that’s investwithharborside.com.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.

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