What are your options? HI, I’m Sherri Echols, Broker Associate with RE/MAX Bryan – College Station. Many clients and friends tell me they want to invest in real estate yet they don’t know where to start.
Here in the US, there are a lot of options for Real Estate Investment. From land, to flipping, single house, duplex, to multi units, commercial, retail, industrial, and syndication, are all within reach.
If you are a first time investor, I always suggest to start small because you can learn a lot from the process. When you get familiar, you can scale up. Your
investment can go bigger.
Then I would like to know, what is your investment budget? You may have the
option of putting as little as 3.5% down, loan with PMI, or general conventional loan depending on your financing status. I will give you some great lenders to talk to who work with investors so you can figure out what sort of loans you will use, and what price range we should look in.
Once we know your financial situation, we will determine what type of purchase you can make based on the budget you have.
There are 4 elements you will be looking at for your investment,
1: cap rate,
2: cash flow,
3: equity buy down (meaning tenant also paying down
your mortgage principle),
4: appreciation.
Cap rate, or capitalization rate, is the ratio of property net operating income to its purchase price, the lower the cap rate means the lower the cash return on the property. In the area here in general, you may be looking at a 4-6% cap rate based on the property location, price and condition.
You will need an experienced agent to dig into the area and find deals for you. We will look for properties that would have a return big enough to cover all expenses and have a profit margin.
Knowing your available fund is
important to determine what type of investment best fits you. Start in one niche with one property and move up if you have to, real estate is a great way to build wealth! Investing wisely with an experienced agent will help you achieve your financial freedom and goals.
Just remember Rome wasn’t built in a day, it takes time and it doesn’t usually happen by dumb luck. It takes strategies, time, effort and planning. I’m your Community Market Leader Sherri Echols, a helping hand for a happy home.
