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Are you ready to take the next step in your real estate investing journey? You may have a lot of questions, but don’t worry–we’ve got you covered. On this episode of The WealthBuilders Podcast, real estate investors Frank Pulley and Karen Conrad unpack financing options, how to not overpay for a property, HELOC do’s and don’ts, and how to work with property managers.

Check out these shownotes for questions we address on this episode:

1. How do you know you that you are not overpaying for an owner-occupied home?

  • Go on websites like Zillow, Trulia, & Realtor.com. Then, look at others homes that were sold in your area with the same amounts of beds and baths. Your lender will give you some protection too, as you’ll only qualify for homes that you can afford (Still, do the math yourself. You want to have plenty of margin in your budget.)

2. When does it make sense to pay for points on a mortgage in this high-interest climate?

  • If you have bad credit, can make your money back in 5-7 years, and/or don’t plan to refinance.

3. When considering a piece of property, are their factors to consider besides price per square foot?

  • Look at homes sold in the past six months. If prices are down, it means the market is declining and you want to adjust your price. You also want to conducer the number of beds and baths & the quality of the neighborhood. 
  • For fix and flips, compare the price per square foot on the property you want to flip to the price per square foot on renovated homes of a similar size and neighborhood. This will help you calculate your as repaired value. 

4. What are your thoughts on getting a multifamily home to rent as a first time homebuyer?

  • It’s a great idea! However, you may need a reality check. Multifamily homes are harder to qualify for because they’re typically more expensive. If you plan on living in one of the units, it’s important that you represent yourself as the manager for the property rather than the owner, or else you’ll get calls 24/7!

5. What are your thoughts on buying an investment property before your personal home?

  • It depends on what you’re looking for in a personal home and what you want in an investment. (Plus, which one comes on the market first!)  If I find a smoking deal on an investment property, I can buy it, wait two or three years until it starts cash flow a little bit, and build some equity. Then, it might make sense to look for that personal home, or vice versa.

6. Does it make sense to put a larger down payment to make sure that I can yield the $300 per month? Or does that defeat the purpose?

    • It defeats the purpose. In real estate investing, you want to make your downpayment back as soon as possible. If you pay cash for a house or put down a larger down payment, your ROI won’t be as strong. Instead, we recommend putting 3-20% down on a property that can get you a $300/mo cash flow. Then, your tenant pays the mortgage and you pocket cash as well.

    7. Does getting a HELOC increase your monthly payment as far as how you disclose to a lender?

    • You’re not meant to keep a HELOC balance for long. Ideally, you use it, do a cash-out refinance or sell it. However, even if you don’t have a balance, a lender will underwrite you as though you’ve maxed out your line of credit. 

    8. If I live, in Canada, can I invest in real estate in the United States?

    • Yes!

    9. How can one take steps to get started in real estate investing?

    • The first step is to invest in yourself and get the knowledge you need! That’s why we host The WealthBuilders Real Estate Workshop every April and October. At this event, we train new and advanced investors alike about how to invest in real estate from a biblical perspective. Once you have the money, get a pre-approval letter from a lender, connect with a real estate agent, and start shopping!

    We hope this content has helped you know how to get started in real estate investing. To hear more about these answers in depth, check out the corresponding episode of The WealthBuilders Podcast!