Difficulties for The New Property Investor and How to Overcome Them
When asked for rental property investment tips, I often tell people the story about how, as a youth, I was not content to work for years with little to show for all that work. It was early in life that I decided to create my own empire in a sense; investing in a way that created not just financial security but actual wealth. I realized early on that investing in rental homes is the best way to create a passive income while creating valuable long-term assets. This is not to say that I did not have challenges when I began. I did have some fairly big, tricky challenges when I first started to invest in real estate.
Cash – the trickiest challenge.
When I was starting out and researching rental property investment tips, I had a good job; one that was fairly well paying as well. However, liquid cash was still the biggest challenge I faced at the time. I didn’t have a wealthy godfather or any significant savings to help me when it came to making the down payment to buy a home. At the time, we could put down as little as 10% for a home we were buying (today it is 15%). Just that 10% down payment along with PMI (private mortgage insurance) was one of the ways I resolved that liquidity issue.
I think this is the sort of challenge that anyone just starting out in life could face. Even with a good job and decent pay, it can be difficult to find the extra cash to use for investment. However, I cast around for solutions and there were a few. The biggest one was – wait for it – the 30-year fixed-rate loan of course!
The solutions for my investing challenges.
What the 30-year loan does is, it helps us beat inflation. While all around us things become dearer, this one thing; i.e. the mortgage repayment remains constant and appears more and more puny as the years go by. So, when I first encountered this wonderful, incredible gift, I knew this could be life-changing and have never had any reason to change my mind about that. It was life-changing for me then and has continued to be so for millions who smartly decide to use the 30-year loan for buying rental homes. Using it is one of the best rental property investment tips I can offer.
It is what helps an investor break even. Because this loan acts as a hedge against inflation, I was able to sell a home and do a tax-deferred exchange into four new homes and so on. That loan, what we also call the Fannie Mae loan, was the main thing that made it possible to overcome my investing challenges when I first set out.
The other solution was to take out a line of credit with my bank. Even as a young man, I had good credit, and plus I had a well-paying, steady job. This made it easy for me to apply for a line of credit and have it approved. This enabled me to put the minimum downpayment for the homes I wanted to buy. These are just some of the solutions that helped me overcome my liquidity challenges when I first started to invest. There are more solutions and rental property investment tips that we will be discussing at our upcoming property expo. If you would like to enroll in this free event, simply sign up. It takes just a minute and who knows – it could well be life-altering for you too.