LeSean McCoy is a former NFL player who now focuses on real estate investing, affordable housing development and youth mentoring. LeSean McCoy and his girlfriend focus on acquiring new properties in Harrisburg, PA and in the following article they explain how to get started in real estate investing.
Real estate has always been a solid investment. When the housing market is as hot as it is right now in much of the United States, real estate investing is downright appealing.
Consider this: The average price of new homes has increased by 14% in 2022 compared to the previous year and 27% compared to 2020. The average list price in March 2022? A whopping $405,000, and it’s usually higher in major metropolitan area markets.
If you’ve ever thought about getting into real estate investing, LeSean McCoy’s girlfriend says now might be the perfect time, even if you’re currently in another field. Want to get into real estate? Here’s how it’s usually done.
Financing options are secured and a business plan is created
LeSean McCoy and his girlfriend explain that investing in real estate is like starting a new business. Transitioning to land usually includes researching different financing options and talking to a few real estate agents to get a feel for the land in the investment arena.
The transition also includes examining what being a real estate investor entails and tactics for landing great real estate deals.
Financing options can be key. LeSean McCoy and his girlfriend say getting into real estate investing means not getting regular paychecks, so many new investors have funding secured as well as funds in reserve, whether through a retirement plan. savings or 401(k) or other funds set aside for the new business.
Real estate investment experts generally recommend that even new investors put at least 20% less on a popular rental, consider the loss of cash flow that may increase due to vacations, and always keep a financial reserve to meet maintenance. regular and emergency repairs.
LeSean McCoy and his girlfriend on choosing the investment strategy
LeSean McCoy explains that there are three main categories in the world of real estate investment strategies. Even before finding the first investment, many beginners in real estate investing determine the investment strategy with which they feel comfortable.
The active strategy is the most practical form of investment. This can include everything from fixing homes and flipping them, managing rental properties, selling to other investors, or even working as a licensed real estate agent to develop a portfolio.
Passive investing is less about daily work and results according to LeSean McCoy and his girlfriend. With this approach, real estate investors are comfortable with more recurring rather than regular streams of income. Most passive investors can partner with other investors to target properties that can be managed by others.
A passive real estate investor typically participates in real estate transactions through crowdfunding or shares in a real estate portfolio already fully managed by someone else.
Know the ins and outs of the market
Success as a real estate investor means knowing your territory to determine what is actually a good deal. A local market should be researched, paying particular attention to whether fair market land values are generally rising or falling and the overall income potential of a specific property under consideration.
Find the first investment
Even though there is a solid game plan for real estate investing, it can be difficult to determine the best investment property to start with. LeSean McCoy’s girlfriend says newbies usually decide whether they want to buy a rental or take out a mortgage for a single-family home.
Rentals can be tricky as tenants need to be considered and it’s generally riskier than a single family home for the investor. Rental investors typically see an average gross yield of 9.4%.
There are also other factors to consider. Schools credit should be at least 620 and there should be a 20% down payment to secure a fixed rate mortgage for a single unit property. Go to adjustable rate mortgage rate? A credit score of 620 is still the minimum but 15% down payment is required for a single family home according to LeSean McCoy and his girlfriend.
Financing the first investment
LeSean McCoy says the first acquisition as a newly minted real estate investor can be a little scary, but the good news is there’s several different approaches to consider.
Many investors opt for assistance through a loan from the Federal Housing Administration which secures a mortgage with only 3.5% down payment. There are also hard money loans, which allow faster execution of transactions but with higher interest rates.
Non-bank lenders such as LendingHome are becoming increasingly popular with investors who may encounter mortgage qualification difficulties unexpectedly. According to LeSean McCoy’s girlfriend, deals typically close in about two weeks with online lenders, compared to up to two months with traditional banks.
Other newbie real estate investors may approach friends or family for early loans, especially if a transaction looks like a very lucrative investment.