If you’re a first time real estate investor, you may be reeling while trying to figure out the best place to start. Real estate investing in California is one of the best ways to build passive income and generate wealth, but it’s also one of the most challenging places to get started. With high real estate values and plenty of competition, you need the right strategy and a team of mortgage professionals behind you in order to succeed.
Tips for First Time Real Estate Investors
Start by Setting Clear Goals
Before you apply for real estate investment loans, begin looking at properties, or do anything else, begin by setting clear goals. Investing in real estate in California is competitive and challenging, so being clear about the direction you are going will help you stay on track as your purse your ambitions.
Determine your financial objectives and investment goals. Consider whether you are aiming for long-term appreciation, rental income, or a combination of both. As you figure out what you are aiming for, you can begin to consider the type of property and financing that will best fit your plan.
Understand Your Financing Options
Take the time to explore different financing options, such as mortgages, loans, and partnerships. Many first time investors assume they need to prepare for the purchase of an investment property the same way they would for a conventional mortgage, but that’s not always the case.
In fact, there are many more financing options than just a 30 year fixed with 20% down, qualified based on your DTI, credit score, and income. If that typical model is not going to work for you, consider one of the other options we have to offer:
- Bank statement loans: Perfect for self-employed borrowers or investors looking to qualify based on something other than their tax returns, a bank statement mortgage is extended based on 12 to 24 months of your bank statements rather than other income and tax documents. If your tax returns don’t show the full picture of your income, this might be a better fit for you as an investor.
- Cash flow investment property loans: When you are buying a property that will generate enough rental income to cover the mortgage payment, you can leverage a cash flow loan. These mortgages are qualified based on the revenue potential of the property based on comparable rentals in the area and the appraised rental market value of it. This can be the perfect solution for both short term vacation rentals and long term lease properties.
We specialize in creative solutions to help real estate investors in California, whether you are buying real estate in California as a self-employed borrower, need to qualify based on the property’s earning potential rather than your current income, or anything else. Contact us any time to learn more about how we can help you reach your goals even if there are hurdles to overcome along the way.
Build Your Network
Real estate investors in California should include a network of professionals you can trust. Begin making connections with people you can work with, with individuals and organizations in a variety of industries, including real estate, mortgage lending, remodeling, marketing, and property management.
Every step of the way, successful real estate investors are leaning on their network to achieve their goals. Establish a network of reliable contractors, property managers, and real estate professionals who can assist you with property maintenance, tenant management, and investment strategies, especially while you are a beginner.
Diversify Your Portfolio
We understand how daunting it might feel at first when choosing to become a real estate investor, but keep in mind that one of the ways to be successful in real estate in California is to diversify your investment portfolio. One property at a time, keep adding to your network of investments to create substantial passive income and insulate yourself for the inevitable challenges that may arise.
Consider diversifying your investments by exploring different types of properties, such as residential, commercial, or vacation rentals. Diversification can help mitigate risks and maximize your investment potential, a strategy that even experienced real estate investors try to follow.
Be Prepared for Challenges
While it’s true that investing in real estate is one of the best ways to create passive income and build wealth, it doesn’t mean it’s going to come without any challenges. Be mentally and financially prepared for bumps in the road.
There are plenty of hurdles you may have to overcome in your investment journey, including market fluctuations, tenant turnovers, and unexpected maintenance costs. Having a contingency plan and financial buffer can help you navigate these challenges more effectively.
When you’re ready to learn more about a cash flow investor loan or apply for a mortgage for your investment property in California, reach out to us. We’re ready to partner with you as you reach your goals in real estate.