Question

[Michael Oldani]

This is probably a stupid question but I keep hearing get your finances in order but I not exactly sure what people mean by that? Another question to get pre approved to purchase my first property where would I go to do that? 

[Scott Trench]

To me, having your finances in order so that you have a reasonable position from which to begin investing in real estate involves the following:

- Having saved up the down payment (in cash or liquid after-tax assets, not including home equity and/or retirement accounts).

- Having $10,000 - $20,000 + after the down payment and expected rehab costs that can be used as a cushion to cover both expenses related to the property and things in your personal life that could compound with problems in the property

- Saving $1,000+ per month from your outside of real estate activities in cash or other usable net worth (not home equity or retirement accounts)

- No bad debts (high interest rates (5-6%+ or delinquent debts)

If you are doing those things, you are in a pretty good position, financially speaking to begin investing in real estate, in my opinion.

If you aren't close on all or most of these things, real estate is likely to be more risky for you than for another investor.