Okay -- you've been talking about doing it for years now, and today is a perfect time to put your plan into motion. New Year's Day is tomorrow, so let's not delay on your real estate investment plan for 2005.
Keep in mind that while you may not be ready to purchase a real estate investment in 2005, you can at least take steps with all the other things you need to do to get ready to invest. The steps are pretty simple, and include keeping up with your credit scores, reducing your spending, increasing your saving, building a team, determining your investment of choice, then getting out there and doing it. Here are the steps in detail:
- I will check my credit report at least once a year, preferably twice. Checking your report consistently is an active, rather than passive, activity. Checking it actively prevents an identity theft from wreaking havoc on your ability to buy or invest in anything, alerts you to bad information being pumped into it by credit reporting agencies, and prepares you for a healthy credit picture in the future.
Here are the three major credit reporting agencies' websites:
- I will get my financial house in order by spending less than I make, creating a spending plan (instead of a budget), paying off debt and beginning to save for a down payment. These steps adhere to what I call the G.O.O.D. principle -- Get Out Of Debt. The ONLY way to get out of debt is by creating a spending plan that pushes you to this goal. Deny yourself, provide for your needs and some wants, and use the rest to pay off debt or create a super-sized savings account. Here are some resources:
- I will create a real estate investing team. This starts with a mortgage professional (which could be where I bank or the company that financed my house), a good Realtor who understands the needs of investors, a settlement company, a home inspector, an attorney, an appraiser, an insurance company, a fix-it crew and a property management company if I'm not going to manage the properties myself. This may also include getting my own real estate license and affiliating with a real estate company so that I can maximize any commission dollars as part of my down payment strategy.
- I will research the various real estate investing options and determine which one I will pursue. However, I will not be stricken with paralysis by analysis. The options available to me include: property for flipping, property for renting, residential rentals, commercial rentals, paper products (discounted notes, tax liens, second trusts, etc.), land (to rent out for agriculture, harvest timber, use of natural resources, renting for commercial advertising billboards or other uses, or hold and sell for higher profits later, etc.) and REITs (real estate investment trusts that are sold on the stock market), to name a few.
- I will actually meet with the people mentioned above to get my investing on the go. Instead of reading yet one more article, buying one more book, searching out one more investor website, I will actually get out there and talk with the mortgage guy or gal so I know exactly what will be required of me when it comes to investing. I will meet with the Realtor to start seeking out that first property. I will actually attend a foreclosure sale so I get the idea of what it is I'm looking for. I will talk with a contractor about what it would cost to replace a roof, fix a bathroom and replace a furnace so I understand the up-front expenses of fixing up and maintaining a property.
Whatever you do -- don't do nothing. And remember, as you invest in real estate, also invest in yourself.