Advice for newbies

[Stephanie P.]

Hello New Investors.

We've been at this for some time now and we see a lot of the same questions being bandied about here on BP so let's put some of them to bed right here.

1. If someone is asking you to pay upfront fees that don't go toward a third party for appraisal and credit report, run away. Be respectful. Be courteous. Be gone. Real lenders and brokers don't charge application fees up front.

2. You don't need an LLC right away. You just don't. Most lenders don't require it so neither do brokers. If it would make you feel better, then get one and pay the higher fees associated with entity review, but you don't need it. I think an umbrella liability policy suits most people just fine. Disclaimer. I'm not an attorney and this is not legal advice. If you needed me to tell you that, maybe this post isn't for you.

3. Go with traditional financing first. Conventional is generally the cheapest money out there because it's guaranteed somewhat.

4. To scale your business, house hack. There is no other way to get into a multi family property with virtually nothing into the loan. You can get 100% financing on FHA with a seller contribution of 6% and a gift from a relative for the rest of the closing costs. Do that for a couple of years on different houses and your investing journey will be well on the way.

5. Being a landlord isn't for everyone. It's okay. There are plenty of ways to make money in real estate without getting a call at 3am about an overflowing toilet.

6. Loans aren't all about rate. Sometimes the lowest rate loans don't close because the situation doesn't fit the guideline. Get a broker you trust.

7. Brokers are better (usually). Just like number 6 above, not all scenarios fit for a broker. Sometimes, a bank or credit union can have a good answer to your question and cheaper. Other times, they don't have a clue. Ask around and get various opinions and see for yourself.

8. Build a team and stick with them. Nothing better than being able to call your lender on a Sunday afternoon when she's at her kids soccer game and you're out looking at properties AND SHE ANSWERS. Goalllllllllllllllllllllllll!!!

9. DSCR loans, like hard money and conventional financing, are all tools. As tools, they have specific uses. For example; you wouldn't use a hammer on a light switch if it was broken and you wouldn't use hard money on your primary residence.

10. Life's a marathon, not a sprint. Enjoy the ride. Don't get in over your head right away. Learn to swim first.

All the best

Stephanie