Real estate investment is not as big and scary as you might think. It is relatively easy to get started. Here is how anyone can get started with Detroit real estate investment.
Your First Investment
The first real estate investment you should make is your own home. It doesn’t make sense to make real estate investments when you are paying rent. Make your money work for you and purchase your first real estate investment. It doesn’t have to be the perfect house, it just has to work for your needs. Keep in mind, other people will be living there, so make upgrades but you don’t have to go too crazy.
Proper Financial Management
If you don’t have the cash to pay for your Detroit real estate investment right away, that’s ok! You just have to work on getting your finances in order to save up for a down payment and apply for a loan. There are a handful of first time home buyer assistance programs that can help you get a loan with a lower down payment necessary than traditional loans. Once you get qualified and have the down payment, it’s time to locate your first investment!
It is important to do research on your first and successive Detroit real estate investments. Make sure the neighborhood is in demand; this will help you find renters when you’re ready. Check out the schools, entertainment, access to shopping and groceries. You will want to make sure you choose an investment that would work for multiple family types. This will give you the best chance to find a good renter in the future.
Also, check into each available property. Check that the taxes are paid, check the zoning, verify if the property is in a property owners association, this will cost you over time and eat into your rental profits. Make sure you conduct an inspection of the house you are interested in, most lenders will require this anyway. You want to make sure you pick a house with a good structure, a comfortable floor plan, and some curb appeal.
Begin Investment Cycle
Once you have purchased your first house and moved in, keep on top of your payments and find ways to make extra money. Pay off your house as soon as you can. The more principal you pay on top of your minimum monthly payment, the faster the loan will decrease and you will pay less interest over time. Once your home is paid off, it is time to look for your next Detroit investment.
Buying Your Second Investment
Now that you are only paying homeowner’s insurance and utilities, you will have a lot more money to save up for your next down payment. You will not qualify for the same first time home buyers loan, so you will have to come up with at least 20% of the purchase price of your next investment. Once you have the down payment and are qualified for the loan, you can research and purchase your next investment. You can now rent that home, or move into it, depending on how you feel about your first home. Make sure you charge enough rent to cover the payments and continue to pay off large chunks of the loan principal. And this is how anyone can get started with Detroit real estate investment. You get to the point where your rental income pays for the investment. Save up more money for the next downpayment, become qualified for the loan, purchase the next one, and so on and so on. Now you have a portfolio of homes that are paying for themselves, and you will have residual income.