As we head into a new season, I am reminded that this is one of the best times of the year to embark on a new venture. Like a pilot taking off into the air for the first time, you may feel propelled towards the next stage in your life, ready to activate your ideas and get your plan off the ground.
My ultimate goal has always been teaching you how to reach financial freedom so that you can build wealth for the Kingdom. However, at this time each year, I feel that ambition grow even stronger. I know through 30 plus years of experience that one of the best ways to build wealth is through investing in real estate. I firmly believe that anyone can become a successful real estate investor and change the trajectory of their financial future as long as they are willing to learn.
Throughout the years, I have personally helped people, young and old alike, become millionaires through simple real estate knowledge. If you feel that God is pushing you to take the next step financially, this blog will teach you how to build wealth from real estate investing.
In addition, our team created a free resource called The Ultimate Investment Property Checklist. Fill out the form below for a simple, step-by-step guide to help you purchase your first investment property:
A Beginner’s Guide to Investing in Real Estate
1. Learn to Put Money Aside For a Down Payment
The first step to getting started in real estate investing is saving for a down payment. I often tell the story of a young man in Dallas who came to me overjoyed and ready to begin his real estate investing journey. The only problem was, he didn’t have any money saved! I challenged him by saying, “come back to me when you have $10,000 saved up.” Six months later, he called me and I walked him through the process of buying his first investment property. He went from owning zero properties to owning 63 investment properties.
The advantage you have today in this market is a down payment can be as low as three percent. So, let’s think about that for a minute. That means if you’re buying a 100,000 dollar house, that would be 3,000 dollars. Not as scary and intimidating as you might think, right? I recommend you start by calculating how much you can comfortably save each month and how long it will take you to save the amount needed for a down payment. This will give you a firm time frame and the ability to adjust your savings if needed. You may even want to look into a high-yield savings account that will help you gain more interest than a regular savings account.
2. Learn to Track and Improve Your Credit Score
Before you start discussing how to finance investment properties, you need to take a good look at your credit score. Your credit score basically determines your buying power. The last thing you want is to be denied or forced into paying extremely high-interest rates as a result of poor credit. While it may take some time to bring up a low credit score, it is doable if you begin by taking an in-depth look into your credit report. If there are any errors or incomplete information, consider disputing them by contacting the credit bureau. Even if they are small mistakes, they can make a difference when it comes time to invest in your first property!
Once you’ve thoroughly reviewed your credit report, you need to have a solid understanding of exactly how you plan to improve your credit. If you’ve been slacking with paying bills on time, make a payment calendar to stay on top of due dates. Work on rebuilding your credit by adding positive references to your account, such as secured credit cards or credit builder loans. If you pay those accounts on time, it will boost your credit score in the long-run. You should ultimately aim for a credit score above 640. A bad credit score isn’t the end of the world, and it certainly doesn’t mean you can’t become a real estate investor. However, it’s important that you identify any credit issues beforehand and productively work towards a solution. That way, you’ll in good shape when it comes time to finance!
3. Buy a (Personal) Home to Live In
People usually have two options when it comes to finding a roof over their heads, either renting or buying. If you’re serious about real estate investing, I’ll explain to you exactly why I believe that purchasing a personal home is the best option. First off, if you’ve decided to go with the renting route, you’re already paying a monthly expense to your landlord. That’s a big chunk of money going out the door every single month. When you rent, you don’t have the ability to build equity. Therefore, you’re missing out on a valuable asset. Why not use your expenses from rent and put it towards your own home so you can build equity? If you’re still not sold on the idea, stay with me because this leads right to step four.
4. Build Equity and Use Your Home As Your Bank
One of the most beneficial rewards of being a homeowner is that you can build equity in your home by paying down your mortgage. Calculating your home equity is easy. All you have to do is subtract the amount you still own on your mortgage from the current market value of your home. After you pay down what you owe on your home, you can begin to use your home as your bank. In other words, you can use your equity to open a HELOC.
A home equity line of credit functions the same way a credit card does. Essentially, you’re allowed to access a certain amount of funds for a limited amount of time. There are many pros and cons involved with opening a HELOC, however, when done the correct way, it’s a great alternative funding source that can be used to purchase an investment property. Before you jump into using a HELOC, I strongly urge you to do your research. Those who get burned are often the ones who jump in headfirst without any prior knowledge or understanding. Once you’ve acquired a HELOC, you can use it as a down payment on your first investment property.
5. Rinse and Repeat
If you’ve made it this far in the process, I commend you. It’s not easy getting to this step, but this is the fun part! This is when you get to take the knowledge, understanding, and wisdom you’ve gained throughout the process and use it to buy your second investment property. To recap, at this point in time, you should own a personal home and one investment property. When it comes time to look for your second investment property, do the following. Take the same amount of money you put in the first house, pay that house down, either obtain a HELOC or refinance, and put it towards your next investment property. Now all you have to do is rinse and repeat!
Ready to invest in real estate? If so, download The Ultimate Investment Property Checklist. This interactive tool will show you how to secure a profit in real estate investing step-by-step. Cover your bases in:
- Analyzing a profitable market
- Purchasing a profitable property
- Exit strategies
- Screening and securing a tenant
- Legal matters
- So much more!
You’ll also get every formula our WealthBuilders Real Estate Coaching Team recommends for vetting investment properties. Download it by filling out the form below:
Am currently in interested to be part of wealth builders
Please email email@example.com and we can help figure out the best program for you.
Interested in property investment
Hi Peggy! If you are interested in real estate investment and want to learn more, the WealthBuilders Real Estate Workshop could be a great option for you. We hold events twice a year, and the soonest one is April 22-24, 2022. If you are interested in joining our livestream, here is where you can get more information: https://billyepperhart.lpages.co/april-2022-real-estate-workshop-denver/
I’m interested in property investment and I have just sold my house
Can you continue to use an HELOC to buy more investment properties and if so, how does that work? I am already in process of refi primary residence to purchase first investment property shortly. I want to use the HELOC I already have to buy more properties.
Yes, the way a HELOC (Home Equity Line of Credit) is designed, you are able to draw on the line of credit up to your credit limit, make the minimum monthly payments based on your loan balance, and pay it down as money comes in which allows you to re-draw on the available credit as needed. Because the collateral is your primary dwelling, you do not need to disclose how you are using the funds, or specifically in your case, provide any information on the property address or reason you are drawing on the HELOC.
Hello I am interested in building wealth…
Hello! Thank you for reaching out. If you have specific questions, feel free to email firstname.lastname@example.org. If not, our free blogs and videos under our website’s ‘Get in the Game’ tab are a great start.
Hello Billy, (wealthbuilders.org), It’s great reading about your approach towards Real Estates Wealth building using the (HELOC) method. If followed accordingly as designed in the process, I believe it’s one of the simplest way of Building Wealth in Real Estates Business. The catch though, is how to exit or build your Credit Score.
Currently I am on my first phase of my Real Estates journey with Wholesaling as my primary income source, with the focus on saving for my personal home Equity as I transition to Investing.
So I will be so grateful to be part of your mentorship that will equip me with enough knowledge and resources.
Billy, I have also been by your titles, especially the “Pastor “part of it which gives me have much Faith and Confidence in the Wealth Builders.
Thank you for connecting with Billy and Becky, and we congratulate you in your wealthbuilding journey! Wholesaling is a good place to start. If you want more information about how to build a better credit score, check out this podcast: https://podcasts.apple.com/us/podcast/the-wealthbuilders-podcast/id1534629472#episodeGuid=https%3A%2F%2Fthe-wealthbuilders-podcast.castos.com%2Fpodcasts%2F13792%2Fepisodes%2Freal-estate-financing-the-credit-score
Found you through Lance Wallnau on Gettr. Briefly… I’m retired. On fixed income of small retirement and SocSec. I have zero debt, golden credit, score of over 800. I own my home outright (obviously since no debt). Have about 1/2 of what the home is worth in savings. I wouldn’t consider my combined worth a huge amount by todays standards. My total income is under $30,000 annually. Here is my question, my savings is sitting, basically doing nothing. Do I buy gold or real estate? Kind of afraid to go in debt. My concern is protecting what I’ve worked for in order not to lose it to the govt in some way or another. Times are so uncertain and it’s scary to me.
Is there way to see free webiner on 1st time investment property( real estate) that was done April 2022?
Here is the link to the recording: https://www.youtube.com/watch?v=3hsfaOw5X_8
I’m interested in building wealth through property. Please send a free property reading material… i wish to start.
Hello! You may be interested in our First Time Homebuyer Guide. You can find it here: https://www.wealthbuilders.org/making-sense/