If you’ve been thinking about investing in real estate, here’s what you need to do before heading out to shop for properties.
1. 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?
2. 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.
3. Get pre-approved for a mortgage
You’ll need the following in order:
- Personal documents
- Tax returns
- Proof of income
- Proof of assets
- Summary of debt
4. 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.
5. 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.
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