3 Major Signs You’re Ready to Invest in Real Estate

July 5, 2022 by Cindy Steelman

Real estate is one of the best investments for those looking to build long term wealth. It offers a reliable ROI over time, and there are an abundant number of choices for funding real estate investments, as the investment has a real and tangible value from the beginning.

If you are considering an investment in real estate, determining whether you are financing ready to do so may be a challenge. Keep reading for some signs that you are ready to invest in real estate.

1. You have substantial savings

Of course the purpose of an investment property is to make money, but as you have likely already figured out: it usually takes spending money to make money. To be in the best position for buying an investment property, be sure that you have a substantial savings to fund potential emergencies or lapses between tenants.

In order to benefit from the property without it becoming a financial catastrophe, buy the property from a position of financial strength and not desperation. If you have an emergency fund that will cover 3 to 6 months of expenses and can continue funding your retirement accounts after purchasing the property, you are probably in a good position to invest.

2. You have the time to manage another property

Managing an investment property will take time. The amount of time it takes will vary significantly depending on the initial attention it needs to be ready for use, the type of rental it will be, and how much of the work you are doing yourself.

If you buy a fixer upper, either with plans to flip it or to renovate it for use as a rental property, consider how much time you will need to dedicate to the renovation process. After estimating the time it will take, add another 50%. Renovations tend to take more time and energy than people estimate. While this is often well worth the time and effort, make sure you have the margin in your life to manage the project, whether that means actually doing the work or keeping up with contractors who are doing it.

For a property that will be used as a rental, there are different methods that will require different amounts of time. Long term leases may end up being a lower time commitment; if you have a good tenant, it will be mostly passive income after the initial investment of time to screen tenants and sign a lease. Short term rentals will take a bit more time, as they need to be regularly cleaned, staged, and rented.

3. You have the stomach for risk

All investments involve a level of risk; this is where the potential for return comes from. Before getting into real estate investing, be sure that you have the right temperament for it. In other words, make sure you have the proper tolerance for risk.

To mitigate the risk of the investment, be well educated about how much you can expect to earn from a property in the area you are considering, taking your time to research various markets. Whatever financial risk you take one, make sure you are both mentally and financially prepared for the worst case scenario (even though this is an unlikely outcome). Most real estate investors learn through small blunders along the way and ultimately find it to be a lucrative retirement strategy or passive income stream. No investment is a guarantee, but with the right knowledge and safety net in place you can take part in the exciting real estate investing game.

If any of these signs apply to you and you would like to see if you are ready to invest in real estate, give me a call today! I’d love to chat with you about the best way to invest in real estate right now. And for more information on real estate purchases, investing and mortgages, check out my latest posts below:

5 Common Mortgage Mistakes to Avoid

The Most Important Steps Toward Buying Your First Home

Steps to Determining Your Mortgage Budget

5 Benefits of Buying a House with Good Credit

What’s the Difference Between Pre-Approval and Pre-Qualification?

10 Days to Know About a VA Loan

7 Signs You’re Ready to Buy a House

How to Build Credit to Buy a House

Combat Inflation This Summer as You Save for a House

June 30, 2022 by Cindy Steelman

Planning to buy a house this year and worried about how you will save with rising consumer prices? You aren’t alone. Many Americans are concerned about how they can meet their financial goals with unpredictable and unavoidable inflation affecting so many facets of their finances. combat inflation this summer as you save for a house

If you are in the home stretch of buying a home, with your credit score where you want it to be, then you need a strategy to save for closing costs, down payment, and moving. Check out these tips for ways to combat inflation this summer and stay on track for your goals.

Try a “Staycation”

Instead of taking a trip this summer, combat the rising cost of fuel that impacts both airfare and road trips by planning a staycation instead. By eliminating the cost of accommodations and travel, your time off can be just as enjoyable while costing just a fraction of the original amount.

If you’ve never planned a staycation before, here are a few ideas:

Make a list of restaurants you have wanted to try in town and make a plan to visit some
Go camping in the backyard or at a local campground
Look for local community events like festivals or movies in the park
Visit local splash pads and rank them
Have a cooking competition or family talent show
Have themed days at home, like pajama day, water day, spa day, sports day, or whatever else your family loves
Check out local museums and attractions

Set Monthly Challenges

Each month this summer, challenge yourself and your partner to a different financial goal. Some ways to do this might be:

No-spend week: Declare a no-spend week, where apart from essential bills everyone in the home spends $0. That includes food, gas, and things you normally consider as a regular expense like coffee, haircuts, or other “necessities.” This is a great way to remember just how frugal you can be and what things you can live without. Chances are you will end the week either a) realizing you could go without some things more long term or b) feeling extra grateful and seeing a bigger number in your checking account.
Limit your A/C use: It is normal to see utility bills rise significantly during the summer months as we all want to cool off in the air conditioning. To limit your A/C use, try setting the temperature higher during the day when you can be out and about. If you don’t work, plan outings at a free museum, splash pad, or park for the heat of the day so you won’t mind using your A/C less. Buy fans that use less energy to operate, or hang out in the yard with a mister going. Any time you aren’t using your air conditioner, you are saving money.
Pause subscription services: One of the places people spend money unnecessarily is on subscription services. Consider pausing expenses like streaming services or subscription boxes for a month or two. You may be surprised to find that you don’t miss them as much as you thought, and if you do you will have saved a bit.

Start a Side Hustle

A temporary additional income this summer can make a big difference in your savings goals. There are many independent contractor, flexible schedule jobs you can take on to increase your income, like:

Ride-sharing services
Food delivery
Freelance work using your current skills, like graphic design, data entry, transcription, or editing
Childcare

Of course, you could always get a part-time job as well, or start a business selling homemade goods on Etsy. There are plenty of ways to increase your income this summer, and even if they make things a little more busy for a while, you can be confident that your hard work will help you meet your goals and stay on track for buying a home in spite of rising costs.

To find out more about getting pre-approved for a mortgage, schedule an appointment with one of our loan officers.

IF you enjoyed this post, these might be helpful as well:

5 Common Mortgage Mistakes to Avoid

The Most Important Steps Toward Buying Your First Home

Steps to Determining Your Mortgage Budget

5 Benefits of Buying a House with Good Credit

What’s the Difference Between Pre-Approval and Pre-Qualification?

10 Days to Know About a VA Loan

7 Signs You’re Ready to Buy a House

How to Build Credit to Buy a House

How to Increase Your Credit Score Quickly

June 21, 2022 by Cindy Steelman

One of the key factors lenders consider when approving you for a mortgage is your credit score. This three digit number can be the defining feature in getting the rate and terms you want, so making sure it is the highest it can be when you shop for a home is essential.

How high does it need to be?

The higher the score, the better your rates will be, but in general if you can get your score above 670 you will qualify for most mortgages. Credit scores are categorized into tiers: credit scores under 579 are poor, from 580-669 are fair, from 670-739 are good, from 740-799 are very good, and from 800-850 are excellent.

After checking your credit score, you can quickly figure out which tier you fall into; raising your score into the “very good” or “excellent” category will usually result in a lower interest rate. If your score is below 670, working to bring it up into that “good” category may be the difference between getting approved for a mortgage or not.

How to Raise Your Credit Score Fast

If your score isn’t where it needs to be, but you are otherwise ready to start looking for a home, don’t worry. With some focus and effort you can raise your score, possibly more quickly than you think. Paying off all your debt isn’t necessary (and won’t even necessarily bring your score up), so understanding the factors that impact your score and working with them strategically is your best bet.

1. Consider your credit utilization rate

One of the ways your credit score is calculated is based on your credit utilization rate. This is the percentage of your credit limit that is being used on the balance you carry on any account. For example, a $2500 balance on a credit card with a $5000 limit has a 50% utilization rate.

Work to bring all of your accounts below a 30% utilization rate to quickly impact your credit score. To do this, calculate your credit utilization rate on any credit cards you have, and pay your balances down strategically based on this metric before returning to your other plan (e.g. paying down the card with the highest balance or the highest interest rate). This subtle shift in payment can make a big difference.

2. Ask for higher limits

Without making any additional payments, you can impact your credit utilization rate for the better by contacting your credit card companies and asking for a higher limit. Let’s say you owe $3500 on your card with a $7000 limit. If that card’s limit is raised to $10,000, you just changed your utilization rate from 50% to 35% without spending a dime. As soon as the new limit is reported to credit bureaus, you will see this new credit utilization rate reflected in your credit score.

3. “Piggyback” on someone with good credit

If you have someone close to you who has excellent credit, consider asking them if you can “piggyback” on theirs by becoming an authorized user on their credit card. You don’t even have to have your own card or access to the account, but the high credit limit and excellent payment history will be tied to you when the credit card company reports to the credit bureaus next. This is a quick and effective way to raise your credit score, especially if you have limited credit history and are trying to build your score as fast as possible.

4. Set up automatic payments

Late payments are one of the easiest ways to tank your credit score. If you struggle to remember to make your payments on time in spite of calendar reminders or cell phone alerts, consider setting up automatic payments. This includes payments for car loans, student loans, and any other debts you might have. Take the margin for error out of the equation and watch how quickly your credit score benefits from punctual payments.

5. Mix it up

Credit bureaus score based on how you handle debt, and a more diverse collection of credit accounts will help. If you only have a loan or two, consider opening a new credit card and using it responsibly. On the other hand, if all your credit is in credit cards, consider getting a loan to build your credit. Mix up the types of credit you have to show your ability to manage multiple types of debt responsibly. As soon as these credit accounts are reported, you will see them reflected in your credit score.

To find out more about getting pre-approved for a mortgage, schedule an appointment with one of our loan officers.