If you are buying your first rental property, take some lessons from toddlers who are just learning to walk and taking their first steps: it is not going to go perfectly. Don’t expect to be as successful as other investors right from the start. Take baby steps. It is important that you are able to recover and try again.
Don’t be too proud to accept assistance. Toddlers often master the skill of walking by leaning on a walker or tightly gripping the fingers of a parent. You will benefit from having a mentor you can turn to as you navigate your first real estate investment. Consider the excitement toddlers have as they experience walking for the first time. Be enthusiastic and creative!
Creative financing
The term creative financing refers to anything other than traditional financing from a bank or lending institution. Most of the time, investors are using as little of their own money as possible to purchase investment properties so they can stretch their investment dollars further and earn income from multiple properties rather than just one.
Even if you can make a significant down payment or pay cash for a property, it is ideal to purchase with little or no money out-of-pocket if you are financially stable and not strapped for cash. That way, if you do need to put additional money into the property for any reason to maintain or fuel profitability, you can.
“Subject to”
This method refers to the purchaser continuing to make payments on the loan that was obtained by the seller. The purchase is “subject to” existing financing remaining in place. The contract is executed and the title is transferred, but the loan remains in the name of the previous owner and the new owner is responsible for making the payments. This is beneficial to purchasers because they are able to buy a property with no down payment and refinance the loan in a few months. It is most commonly used when a seller is struggling to make payments, falling behind and heading toward foreclosure. The “subject to” lets them get out from under the payments immediately.
Your first deal will most likely be your most difficult. You will always remember it and the lessons you learn from it. It is understandable to be nervous and experience some anxiety, but do not be afraid. You have done your homework. You are prepared and this is what you should be doing. Forgive yourself when you make a simple mistake. Always keep in mind that the biggest mistake is to let nerves prevent you from moving forward.
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