3 Reasons Why Your First House Should be an Investment Property.

Today’s feature comes from Michael Moore @MooreThanRealEstate (Instagram). His first real estate property was a multi-family home–a duplex. Here he tells you why your first house should be an investment property.

Today’s feature comes from Michael Moore @MooreThanRealEstate (Instagram). His first real estate property was a multi-family home–a duplex. Here he tells you why your first house should be an investment property.   

The process of buying a home can feel like a big scary rollercoaster ride. Once you get to the end, you realize how rewarding and thrilling it can be.  After purchasing my first multi-family home, I can definitely advise you to do the same. There are three reasons why you should consider investment properties as your first property:  

1. Low Down-Payment/Low Start-Up Cost: You will be able to utilize FHA financing to buy your home as a first-time home buyer. This allows you to put a minimum down payment of 3.5% of the cost of the home. FHA financing allows you to buy a property with 1 to 4 units. You can potentially live in one unit and rent out the other 3 units. Tip: I found out after my wife and I purchased our first investment property that we should have each purchased an investment property separately before getting married. This will allow each of you to take advantage of the low down-payment cost and double your investment potential. For example, instead of 1 to 4 units to rent combined, you could have 1 to 4 units each!  

2. Income Generator-Gateway to Financial Freedom. The top two most expensive items most of us will purchase in our lives are houses and vehicles. Not everyone needs a car but no matter what you do in life, you will need a place to live! By purchasing a multi-family house, you’re not only making one of the most expensive purchases in your life but you are also generating additional income. For example, a property with two units rents each unit at $750, with a total of $1,500 monthly rental income. This property has homeownership expenses of $1,095 monthly (i.e. insurance, mortgage payments, and property taxes which are typically made as one monthly payment).  In this scenario you will have a $405 profit/cash flow monthly ($1,500-$1,095). This translates into a yearly passive income of $4,860 ($405 x 12 months) from one property. More properties will allow you to multiply your profit/cash flow which can lead you to your financial freedom!

3. Quality Of Life. My sole purpose to purchase income properties is to improve my family’s quality of life. The more properties I purchase, the higher my passive income. This will allow me to retire early and enjoy life even more. Most people in America spend more time at work than they do with their families or doing what they enjoy. I love spending time with my family and I will do what I can to make sure I spend more time with them than at work. Investing in real estate and owning rental properties will help you generate positive cash flow.  If you are looking for a way to live a better life with your family, assess the risks you are willing to take and if you can, invest! 

3 Tips For First Time Homebuyers.

Today, I will be giving you three tips you should highly consider prior to starting the home-buying process and a free worksheet I use to keep track of my credit score and credit report history.

Looking back to when I was house hunting for my first house, I remember the million questions I had, but I also remember the trustworthy people along the journey that helped me through this process.

Today, I will be giving you 3 tips you should highly consider prior to starting the home-buying process. Also, don’t forget to check out my Real Estate website. 

  1. Check your Credit History and Credit Score: Scores run from 300 to 850 and of course the highest your score the better your mortgage rates may be. You are entitled to 1 report annually for free and you can get it here. Also, if you have a credit card, many offer credit scores for free as a cardholder benefit, if not look into sites like Credit Karma. Some of the things you can start to enhance your credit is pay down debt, credit card debt, pay off delinquent accounts and remove paid debts or errors that appear in your credit history report. This can take a while so it’s always a good idea to start now. Here is a free worksheet I use when I review my score and report annually.
  2. Get a mortgage Pre-Approval: Would you ever go to the grocery store with a list without knowing how much cash you have in your wallet or how much you have in your bank account? No, right? So this concept applies here as well. Doing this step is essential to know exactly how much mortgage and property taxes you can afford. Be mindful that mortgage lenders are different but some of the typical requirements for a pre-approval include tax returns, pay stubs and bank statements. You can shop around for a lender or you can also ask a trusted Real Estate Agent for a lender recommendation.
  3. Save your Pennies|Down Payment|Closing Costs & Other Expenses: The sooner you start saving the better you will be. Needing 20% as a down payment is a myth, nowadays you can buy a home with as little as 3% or 5% down depending on your mortgage lender. However, keep in mind that if you can’t put 20% down, you have to pay a monthly payment towards Private Mortgage Insurance (PMI), this is protection for the lenders. But don’t let this stop you either. Although I am not a mortgage lender and do not know the factors they use for their underwriting and to figure out this payment, I’ve seen some PMIs at around $30 monthly, which is still better than paying hundreds towards a rent and you see nothing in return at the end of the lease.  Keep in mind you will also need funds towards closing costs which can be some thousands of dollars; make sure to ask your future lender all these questions.
    As a homeowner having an emergency fund is necessary to prepare for unanticipated repairs, maintenance and or renovations. You will no longer have a landlord to run to when a problem arises but it’s a beautiful feeling knowing something is yours.


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