Find Financial Freedom Through Real Estate: A Step-by-Step Guide
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Originally Posted On: https://modernloans.com/find-financial-freedom-through-real-estate-a-step-by-step-guide/
Do you want to achieve financial freedom through real estate? Then take a look at this helpful step-by-step guide to get started on the right path.
Find Financial Freedom Through Real Estate: A Step-by-Step Guide
An average of 6,500,000 houses are sold each year. In the US, the pandemic saw a surge in property sales and increasing prices. It has never been a better time to start your real estate journey, but are you ready?
While it takes time and effort, it will be worth it. Read on as we discuss how to find financial freedom through real estate investing.
What Is Financial Freedom?
Financial freedom is the ability to have enough money that it no longer becomes a worry. The burden of debt and paying bills are fully covered by your income. In addition, you have the cash flow to do whatever you want, when you want, and buy the things that make you happy.
It could be a last-minute holiday, a car, or an apartment. However, you cant find financial freedom through real estate investing until you have dealt with the basics. We have listed them below.
Credit cards are a great way to improve your credit rating, if you can use them then pay the item off immediately. However, most people use them to overspend, leaving a mark on their credit history. In this event, pay down your card and get rid of it. You need to keep the revolving balance no great than 20% of the credit cards limit on any given month. Carrying a balance of $1000 on a credit card with a $1,500 limit, even if paid on time will lower your credit rating.
After the cards, pay down any other debt that has an interest rate over 8%. It could be a store charge card or a high interest personal loans. You can use a snowball method, paying off one then using the excess funds to pay off the next most pressing.
Set up a bank account with emergency funds. There should be enough to cover 3 to 6 months of housing payments. So if your current rent is $2,000 a month saving up $6,000 is a great target to hit.
Select a Strategy
Once you have cleared high interest rate credit cards, you are almost ready to find financial freedom through real estate. Before you begin, it is important to know your strategy. What works for one investor may not be suitable for another.
House flipping is the process of buying a home at a low price, fixing it up then selling for profit. It takes a lot of time and resources but can bring the quickest turnaround in profit. You should know about construction and how tradespeople work before you begin.
Wholesaling is a process by which you make deals on great properties, then sell the contract to an investor or house flipper. While sounding simple, it is hard work and requires a very specific skill set.
Buy and Hold
You buy properties and hold them for a long period of time. Earnings come from rental and the equity that accrues in the property over the time period. You can also use short term rentals to supercharge your income.
Create a Business Plan
Your business plan is essential when you want to benefit from a real estate investment property. Even though it is a fluid document and can change, it keeps your goals focused. You should include the points listed below.
- Purpose and business model
- How will you raise capital?
- What is your target deal?
- Who is your target end-user and demographic?
- How will you find deals?
You should also think about how you will manage your time and finances. If you are keeping a job, how will you fit the business in? If you quit, how will you have money to live?
Build a Team
It might be possible to do most of the work on your own, but you wouldn’t want to. There are a number of specific skills you will require. Crucially, you need to work with those who are reliable and trustworthy.
Money sources can come from a number of places. It may be friends, family, or fellow businesspeople. You may also want to consider a home line of equity credit.
This is arguably the most important person you will work with. They will manage the project from start to finish, dealing with repairs, problems and helping forecast a budget. As such, they must be competent and trustworthy.
A given is that they understand construction. If they have contacts such as electricians and plumbers it is an added bonus. Finally, it must be someone you enjoy working with and get along with.
Broker or Listing Agent
If you are following a fix and flip method, then a broker is essential. You will need to sell on your properties once they have been fixed. Some people even choose to become real estate agents themselves.
Attorney and Accountant
You need people to cover the legalities and finances of your operations. They will help you set up the business so could be the first ones you need to approach.
Create a Way to Find Deals
Now you have the framework in place, you just need to find good deals. Think about what one looks like to you. Do you have a specific cost in mind or a target profit from a deal?
After this, create a list of problems that may make you avoid purchasing a property. These can be everything from certain neighborhoods to types of properties. From here, you can begin to make a marketing plan that will help you secure the properties you need.
The multiple listing service (MLS) can only be accessed by licensed real estate agents. It is a database in which you can filter for sale properties based on a number of factors.
Referrals come from a number of sources, such as property managers, attorneys, real estate agents, and financial advisors. Craft emails or letters and send them out to build relationships. It won’t have immediate results but should work over time.
Building an internet presence can yield a lot of results. Build a website and become active on social media. Start to get on trade websites like Zillow and start to create content for your website.
Finding Financial Freedom
Now you know these methods for financial freedom, you just need to put the hard work in. Find great deals, have a strategy, and stick with it. You will have setbacks, but the payoff will eventually be worth it.
If you found this article insightful, Modern Loans can help. We are a Temecula mortgage broker that can finance your next project. Follow me on Instagram and Facebook @thebriandecker for more expert tips.