Articles flood the Social Media telling of how a certain person retired in their 30s. Or ended up a millionaire or has a palatial home. How do these people do this? Are these stories real? Well real or not, they serve as a wakeup call. The earlier you wake up the more advantage you get! You know the early bird gets the worm?
Need and Want
Of course, you live only once but remember two things – differentiate between “want” and “need”. This way you spend only when you need to and only on the things you need. And “delayed gratification” is good for higher accomplishment and character building. You will look back and take pride in your sacrifices and self-control with a sense of achievement.
Fix and Flip
The other benefits of this control are good credit ratings and you will have enough to buy your first house. You could begin investing in real estate with a fix and flip. Such properties are available at low prices. So, if you have some amount saved to make the down payment. You could apply for loans that would cover the cost of repair, insurance, contractor’s fees, etc. Then you can go ahead and put them on auction at high end property auction sites like Sotheby’s.
There are three loan options;
- Online mortgage lenders for the experienced flippers who need money immediately.
- Hard money and Private Money Lenders are best for the novices with poor credit score. These loans come at a higher rate of interest due to the risk on the poor credit rating.
- Banks are best for experienced borrowers with good credit scores. It helps your case if you have a collateral and money for the down payments.
You can qualify for these loans if you;
- Have completed at least one Fix and Flip Project
- Have a credit score of 650 plus
- Maximum loan size offered will be 90% LTV
- Have 10% of the total cost to make the down payment
- Minimum loan size should be $75000.
Single Family Home
Your next upgrade could be a single-family home. By selling the fix and flip you will be able to cover the down payment. The rest could be covered by loans. Banks, money lenders, state and federal bodies offer these loans. The US Department of Agriculture (USDA) is one such body that offers loans for housing and development in the rural areas. The Housing and Community Facilities Program loan by the USDA is aimed at moderate and lower income groups.
The home repair loans provide funds for;
- Removing safety and health hazards on the property.
- Making repairs and home improvements.
- Making the home accessible for the elderly and people with disabilities.
- Reducing the utility bills by making their homes more energy efficient. This can be done by using eco-friendly technology such as the wind, solar, hydroelectric and thermal installations.
There are four types of SF loans. The terms and conditions have been shared in these links.
- Single Family Housing financing:
- Direct Home Loans
- Home Loan Guarantees
- Mutual Self-Help Housing Technical Assistance Grants
- Rural Housing Site Loans
- Single Family Housing Repair Loans and Grants
You are required to meet these conditions as a proof of the ability to repay the loan;
- the property should be in the county
- the borrower must live in the county
- the borrower should be a first-time buyer
- the borrower should not have owned a home for last 3 years
- the owner/borrower should occupy the property
- the loans should not exceed 50% of the principal loan
Do your homework
Learn the jargon for real estate and loans such as Loan to Value ratio (LTV), Retail Sales Index (RSI), etc. This helps you understand the deal better. When applying for the loan sit with the loan officer to discuss the terms and conditions. This will help you issue standing instructions to the bank to make monthly payments towards the loans, etc.
There are other loans such as the multi-family residence loans and construction loans. You can buy apartments, condominiums, duplexes, triplexes or quadruples with multi-family residence loans. While construction loans are short-term loans that can cover the cost of building an estate.
About the writer;
For the past 7 years of her life, Elena has been working in the real estate market. She started as a real estate agent and now she is a branch manager. She also runs her own blog elenatahora.com. Her other interests are reading and diving.