Graham Stephan became a millionaire from scratch, from listing real estate properties up to becoming a real estate agent. Now, he shares an ultimate beginner’s guide to real estate based on his experience, like what Stratford Management Inc Seoul also tackles.
Here are his recommendations for beginners:
Step One: Build Your Credit Score
Building your credit score is crucial to real estate property financing. Lenders look at a borrower’s credit score to determine the type and amount of loan suitable. The higher the credit score of a borrower, the lower the interest you pay, and the lower the credit score, the higher the interest.
Step Two: Save Your Money
You need money to invest in real estate. It’s a reality that you have to give a 5 to 20 percent down payment. A good income and credit score are significant. Live frugal as needed and make money to invest, such as starting a business or having a day job.
Step Three: Proof of Income
Make sure to provide proof of income or consistent paycheck for at least one to two years. Salary employees and self-employed individuals need to show tax returns and at least six months of bank statements. Don’t be too aggressive in tax write-offs to increase your chances of a higher amount of loan.
A buffer of 10 percent is enough for the write off to show you have a decent income. Before filing your tax return, talk to a lender to check your tax return to determine the income you’re showing is okay to get the loan you want to get.
Step Four: Get Pre-Qualified
Speak with the lender first to get pre-qualified to save you time and from frustration. It’s also a good thing to get multiple approvals to get the best rate.
Step Five: Research
Tracking every property is essential. Drive around and understand property values in the area. It’s essential to have patience in selecting investment properties that you can quickly renovate with the best ROI.
Step Six: Make Offers
Be patient and never lose a good deal. Grab opportunities when the price is reasonably low.
Step Seven: Do Inspections
It’s one way to break even and opportunities to talk with contractors to estimate how much you’ll need to spend on the renovation. In that way, you can negotiate for the price.
Step Eight: Close the Deal!
It takes 20 to 45 days, depending on the property.
Step Nine: Make Renovations
Add equity by fixing the property, and make it a rental property. Find a contractor via word-of-mouth or ask around or Yelp. It’s great to get multiple bids from different contractors to see the differences in prices.
Step Ten: Find a Tenant
The best way to find a tenant is using Craiglist. You can also use social media.
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