Creating your business plan is key to managing your business. I have a three-step process to help you get started with a real estate investor business plan.
Once you have the goal in mind, it is time for step 1: Calculate how much cash flow you want from your investment property. You need to answer the questions, “Do I want positive cash flow?” and “How much cash flow do I want?” Keep in mind that when investing in apartments or multi-units, unless there are some income restrictions on the tenant, they will probably pay about 30% of their monthly income toward rent per unit which means you’ll need to rely on appreciation and equity growth over time to create true wealth for yourself.
Setting Investment Goals
Identifying how much ROI you want to earn will help you choose a property investment niche.
GREAT POINT! The first step that every serious investor should take is to set goals– both short and long term. Without setting goals, you won’t know if or when you are reaching them. You’ll also want to make sure that your goals match up with how much time you have available to dedicate to investing! No matter what kind of goals you set, it’s important that they’re attainable and measurable. Whether it’s making $xxx on one single deal or owning 20 properties in 5 years, write down your goals and refer back to them often as a reminder of where you’re headed and why.
Borrow
The first step is to figure out what type of property you want to invest in. You can purchase a single-family house or condo that needs some updating, or one with tenants already occupying the space. If your credit score is good, this may be a less expensive option, since you won’t have to pay for extensive repairs before moving in. A duplex may make sense if you are willing to put in some extra money upfront, as it can attract more investors and renters alike.
Whether you decide on purchasing a home or apartment building, the next step is finding financing for your investment property. Unless your income or assets qualify you for low-interest Federal loans, such as those offered by FHA and VA, expect to pay the standard rate of traditional home loans that are offered by your preferred lending institution.
The BRRRR Method
Diversifying your real estate portfolio is a general rule for ALL investors, but especially those investing in rental properties.
In this article, we will explore the best way to invest in a rental property from an equity cash flow perspective. Whether you have been looking at real estate as a potential investment or currently invest, it is always important to understand how an investment can help you reach your financial goals and continue to run a successful business venture throughout the different cycles of the market. We use cash-on-cash return as our main measure of performance because it represents the actual money that comes into your possession after accounting for all expenses involved with running a rental property ownership business including vacancies, repairs, financing fees, and management costs
Typically, as a newcomer to investments, you will need assistance to buy your first investment property in Colorado Springs.
Plan B
Having a backup plan is key in investing in commercial real estate, having a plan B could mean avoiding unnecessary delays. Taking the time to understand the possibilities of things going wrong during every step will help you deal with any hurdles. Lay these all out on paper and determine your options to resolve these problems. If you do not have any options, reach out and ask a trusted friend, family member, or professional for guidance. While you should gear your efforts regularly towards having available funding sources at the ready, it never hurts to have savings set aside for emergencies as a quickly accessible backup source.
The Five P’s
Buying your first investment property is a big step. There are many different costs associated with buying and holding an investment property, such as The downpayment on the property itself; Fees for mortgage brokerage services; Legal fees to draw up the contract and other closing costs; Inspection and appraisal fees; Property taxes, which can add up depending on location and size of the home or commercial building; Owner’s title insurance coverage
The last one is the only one that varies by state. In Colorado, owners must insure their title before selling their home — if they fail to do so, it’s at their own risk! Some states require that you buy an owner’s title insurance policy while others don’t.
Working with HBR Colorado makes it easy to get started! Why not let our experts at HBR Colorado walk you through the process, helping you feel confident in achieving your investment dreams. Contact HBR Colorado today at (719) 286-0053 to discuss how much you need to save to buy your first investment property in Colorado Springs.