Investing in Real Estate Part 3 - Financing your Investment



In the first two segments of this investment series I discussed the importance of clearly defining your real estate goals and some of the costs associated with owning rental property.
Now, let’s take a quick look at how to finance your investment. The investment option that requires the least amount down, and that can also yield the best results over time, is the buy and hold scenario.
For this type of investment, you’ll need to put down about 20 - 25% of the purchase price as a down payment; you will also need enough in reserves to do any necessary repairs and improvements to the home and make those first couple month’s mortgage payments.
Where does this money come from?  Well, ideally, you save it.  If investing in real estate is a dream of yours and you don’t currently have that kind of money – it’s not too late to start saving now!  There are some great budgeting apps that can really help you get your finances in line and work toward your goals.  I like “You Need a Budget”  and “Mint.com.”
You may also consider finding an investment partner or drawing out some of the equity in your primary residence.  Be careful when considering this option.  Your home is not an ATM, and some financial advisors discourage touching your equity.  But others strongly advocate for it – saying, “why not put that equity to work for you?”
And that brings me to my final point.  Any real estate investment has tax and retirement planning implications.  In addition to a great real estate agent, you need a team of qualified professionals advising and supporting your decisions.  Among them would be a tax accountant, a financial advisor and a lender; all of whom should have some sort of real estate investment experience.
If you’d like an introduction to such folks, I’d be happy to arrange that for you.  In the meantime – keep dreaming and let me know when you’re ready to look for your first investment property! 

Karen Adler, Realtor
Colorado Home Realty
karen@coloradohomerealty.com 
Location: Denver, CO, USA

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