Single-family rentals are an incredible tool to generate wealth. In the past investing in real estate was reserved for the ultra-wealthy. Complexity and high barriers to entry prevented the average consumer from achieving the best risk-adjusted returns of owning real estate along with the four major benefits: cash flow (i.e. passive income), equity build-up, tax advantages, and appreciation.
Everyone should have the opportunity to build wealth through income-producing investment properties! Below is a step-by-step guide for anyone to jump on the path to financial security.
First, build your credit score
The better your credit, the better mortgage rates you’ll be able to secure. Your score should be at least 620 before you consider buying real estate.
Now save!
Typically, you’ll need to put down 5 – 20% of a home’s purchase price depending on the type of loan you secure.
Get organized
Lenders need to see consistent and stable income. Typically you’ll be required to show two years of W-2s and your two most-recent pay stubs.
Pre-qualify or get pre-approved for a mortgage
This entails the bank running your credit, reviewing your tax returns, pay stubs, and other documents before providing a pre-approved mortgage amount based on the information you’ve provided.
~Novel Serialisation: Heavens Fire~
Research, bidding, renovating and renting
Now it is time you’d examine everything you want to buy, research the home, visit the home at different times of the day to get a feel of the neighborhood, make offers on homes (with the potential of losing many times), schedule inspections and potentially renovations. Now the questions are how do you find contractors? Who do you trust to do the work? Lastly, you place a resident and embark on property
management. This involves filtering out applicants, doing background checks, and reviewing bids from contractors if you are renovating.
(OR!) Choose a new way to acquire an income-producing property with Doorvest
Though there’s nothing wrong with the traditional route – it requires a lot of work, time, and research.
This is where Doorvest, an entirely-online platform for owning income-producing private real estate, comes in to alleviate the headache and do the heavy lifting. Instead of having to do all the work manually, you’ll let Doorvest know about your investment goals and we seek out a property that aligns with your goals. Then we buy, renovate, and place a resident. We’ll sell the property to you and what you get is an income-generating home on day one.
Customers get a comprehensive breakdown of monthly cash flow, property activity, legal documents, and reports through an investor dashboard. The platform is ideal for young professionals who may live in expensive urban markets and want their money to work for them. The average downpayment for a home purchased with Doorvest is only $20k.
With the step-by-step guide for real estate investing above, you’re well on your way to becoming a real estate investor and enjoying the perks of homeownership!
By Andrew Luong
About the author
Andrew, CEO, and co-founder of Doorvest, an end-to-end real estate investing platform is on a mission to democratize the path to financial independence for everyone. Andrew is also a real estate investor, Realtor, and mortgage loan officer, who personally started investing in real estate several years ago and accumulated a sizable portfolio while attending the University of San Francisco. With an unwavering passion for all things technology and finance, Andrew created Doorvest so that everyone can have the same access to financial security as those who actively invest in the $3 trillion SFRs (Single Family Rentals) real estate market.
