5 Financial Steps to Take Before Investing in Real Estate
If you’ve been thinking about investing in real estate, here’s what you need to do before heading out to shop for properties.
Create a financing plan
What’s your current income?
How much do you have in savings?
Can you get a mortgage loan?
Will you pay in cash?
Keep your credit healthy
Request a copy of your credit report.
Dispute any errors.
Pay all your bills on time.
Pay down high-interest debt first.
Be strategic about opening or canceling lines of credit.
Get pre-approved for a mortgage
You’ll need the following in order:
Proof of income
Proof of assets
Summary of debt
Do your homework
Compare different mortgages from different lenders.
What interest rates are they offering?
How much will they lend you?
Check in with your current bank and others, too.
Establish liquid funds
You’re going to need some cash on hand to buy, if only for a down payment and closing costs.
Don’t forget about renovations and repairs.
If you’re flipping a house, you’ll need to consider your monthly cash flow.
Secure a backup source of cash.