#3Cent Thursday | EPISODE 11
BEST 3 STEPS TO GROW YOUR NEST EGG WITH REAL ESTATE
When it comes to investing in real estate, there are multiple different avenues you can take. We’re going to give you one strategy that we think is a winner! Please keep in mind that there are a lot of details we won’t be going into in this short blog, so if you are interested in knowing more, please reach out so we can guide you through that process.
STEP #1 – ACQUIRE A PROPERTY!
We’ll assume that you already own your primary residence, and we are now working on expanding your investment portfolio. So the major first step will be to acquire a property that you can afford with ideally putting down the minimum 25% for an investment property (this will ensure you do not have to pay mortgage insurance). Now if you can do the work yourself or at a cost that still pencils, the goal is to buy a property that needs to be renovated. And this is because once you renovate the property, it will increase in value, and you will have that much more equity to work with when we get to Step #3. If you can’t find a property that fits this description—or you just don’t want to go that route—you can still buy a move-in ready rental, just keep in mind that your wealth won’t grow as much or as quickly. When seeking out an investment property, you also want to be very picky and make sure that you are conservatively estimating all of the numbers for expenses, etc. Come up with a minimum return on investment that you feel is necessary for your risk and efforts, and confirm that the property is hitting that minimum ROI. For further help and details with this part of the strategy, please reach out!
STEP #2 – RENT OUT THE PROPERTY!
So now we want to hold the property and let it generate income for us. During this holding period, make sure you are adjusting your numbers as necessary (to reflect reality), and make sure your investment is still bringing you positive cash flow at your minimum ROI.
STEP #3 – USE THE EQUITY AND REPEAT!
As long as the numbers are still working for you, wait the necessary length of time until you can refi your loan on that property. You will then be using the equity you have built into that property (from renovation and/or increase in market value) to help you purchase your next investment property! Continue to repeat this process. The faster that you can do this, the better. To take this one step further, at some point in the future, you can sell half of your investment properties, and use that money to pay off the other half, so that you now own those properties free and clear, growing and growing your nest egg.
Thank you so much for reading, and we hope you've found this information helpful! Please reach out if you are considering investing in real estate so we can customize a game plan specific to your needs!