Real Estate Investing 101

Is Real Estate Investing for You? Real estate offers a great way to diversify your investment portfolio. Because of the stable nature of real estate investments (especially rental property), your returns are based on less risk. As you pay down the mortgage, while the equity builds, increasing your net worth and providing you with leverage from your rental property. If you’re ready to begin, here are the top 5 things to overcome if you want to invest in real estate in Los Angeles.

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Is Real Estate Investing for You if You Fear Failure?

A person‘s fear of failure often holds new investors back and this is definitely something you will need to get past if you want to invest in real estate in Los Angeles. While a new person to the market jump in without testing the waters, finding themselves in the deep end, failing to start at all could be harmful financially in the long run. The advantages that are realized through the rental income that real estate investment offers, giving you a steady cash flow, along with the tax advantages can mean a significant difference in the quality of life during your later years.

Of course, one of the fastest ways to make money in real estate is house flipping for a quick profit on each project. Each house flip can help you with building equity quickly. You want to have a keen knowledge of the real estate market, specifically the local market where the house flip is located. You don’t want to think of this as a long-term real estate investment based on cash flow, but rather a short-term project with a high-dollar return, while still taking into account the cost of loans, insurance, property taxes, mortgage payments, real estate agent commissions, capital gains, maintenance costs, and title transfer costs.

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How do I start in real estate investing if I have bad credit?

Understanding your credit rating and any positive or negative impacts on your credit score is the most important step to resolving any issues. Should the lender feel you are a risk due to poor history or being overextended, you may either be denied or approved for a loan with a much higher interest payment. Once you have taken an assessment of your current standing, you can begin to take the necessary short term steps to raise your score and make corrections, like reducing costs, making timely payments on your house, etc, if you want to become a real estate investor in Los Angeles.

Pay Off Debts

Additionally, lenders will review your debt to income ratio, so it’s important to understand how the outstanding balance, credit available to you, and your assets all factor into their lending decisions for short term funds. Naturally, the less of your monthly income allocated to debts, the more favorable you appear when under consideration for a loan or additional funds. If your ratio is out of kilter, it is imperative that you get past this if you want to invest in real estate in Los Angeles.

Saving

If you haven’t learned how to save yet, this is another thing to get past if you want to invest in Los Angeles. Create a budget that you can realistically live within and include some entertainment, be it scaled back from your norm, and then stick to it. You’ll be amazed at how the savings from reduced expenses will add up to many small changes. The bottom line is, the more you have saved towards your home, along with reserves for emergencies, the better your start will be financially. You’ll save yourself literally tens of thousands of dollars in interest for some slight suffering in the short term, and greatly improve your access to funds down the road.

How to invest in real estate to build long-term wealth – Dec 8, 2020 … What are your short term and long term real estate investment goals (is it publicly-traded REITs or Fundrise?) and how long will it take to achieve them? There are more questions real estate investors should keep … (money.usnews.com)

Planning

Most importantly, making large financial decisions without advanced planning must be a thing of the past if you want to invest in real estate in Los Angeles, even if it’s a short-term project. Educating yourself on real estate investing is priceless, especially when it comes to matters of finance (like in REITs – real estate investment trust – and taxes and rental income for example) and investments. Sadly, many people act without planning and this was the first step to their eventual failure. You always seek advice when buying shares in the stock market, mutual funds (REITs), or any other assets. There’s nothing wrong with reaching out for help if you feel overwhelmed, especially when your goal is to make a profit in the real estate market. If you don’t have a trusted family member or friend to turn to, there are many experts who will be happy to assist you, whether it be a property manager, a house-flipping expert, someone who specializes in taxes or REITs, a real estate agent, or a real estate developer.

Learn how to invest in real estate with educational resources, evaluate investment property using expert tools, and connect with other investors, including REITs (biggerpockets.com)

While it’s hard to ask for help, this is the most important thing of all if you want to invest in real estate in Los Angeles. Why not let the investment property experts who understand the housing market at Jennifer Buys Houses answer any of your real estate investment questions or concerns, with no obligation to you. We’re happy to help you get started! Send us a message or give us a call at (424) 242-9304 today!