Gina Farrell

Indepenent Funding Group

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What To Think About Before Investing In Real Estate

April 21, 2022 by Gina Farrell

What To Think About Before Investing In Real EstateDo you want to invest in real estate? If you are buying property as a real estate investor, there are a number of important factors to consider. Take a look at some of the most important factors to think about before you decide to sign your closing papers.

Location, Location, Location

Just as with your primary residence, it is important to think about the location of your investment property. Location is the most important factor in the value of just about every property, and your investment property is no different. You need to think about the proximity of your property to amenities, the safety of the area, and its proximity to major highways and interstates. Pay close attention to what property values in the local area have done recently, as this could give you an idea of what to expect moving forward.

Your Investment Horizon

How quickly do you need access to the money? You may think that the property is going to go up in value, but this is an unrealized gain until you decide to sell it. How long can you wait before you sell the property? Do you want to purchase the property and lease it out to long-term renters, rent it out to short-term renters, or simply repair the house and flip it for a profit? Different properties are better for different situations, so think about your investment horizon before you purchase a property.

Expected Cash Flow

As a property owner, you still have to cover the overhead expenses. This includes your mortgage, homeowner’s insurance, and real estate taxes. Therefore, make sure you understand how much rental income you can generate if you decide to purchase that property. Keep in mind that you may have some tax deductions you can claim as a rental property owner that might make these overhead expenses a bit more affordable.

Find The Right Property For Real Estate Investing

These are just a few of the many factors you need to think about if you are looking for real estate investment opportunities. The right property for one person is not necessarily the right property for someone else. Think about these key points before you decide which property you want to buy. 

 

Filed Under: Real Estate Tagged With: Location, Real Estate Investment, Real Estate Tips

The ‘Debt to Income’ Ratio and How It Affects Your Home Purchase

December 22, 2021 by Gina Farrell

Real Estate Terms: The 'Debt to Income' Ratio and How It Affects Your Home PurchaseThe real estate market is rife with terminology that can make a home purchase seem more than a little complicated. If you’re currently looking for a home and are considering your loan options, you may have even heard the term ‘Debt to Income’ ratio. In the interest of simplifying things, here are some insights on what this term means and how it can impact your home investment.

Determining Your ‘Debt to Income’ Ratio

It’s important to consider what exactly your DTI ratio is before your home purchase as this will quickly determine how much home you can actually afford. To calculate this number, take your monthly debt payments – including any credit card, loan and mortgage payments – and divide them by your monthly gross income to get a percentage. In the event that your monthly debt is $700 and you make $2800 in income, your DTI is 25%.

What Your DTI Means To The Bank

The DTI is a very important number when it comes to a home loan because it enables the bank to determine your financial situation. A DTI of 25% leaves some wiggle room, as most banks will allow a DTI percentage that runs between 36-43%. In the case of the above example, this means that the most debt this person could take on per month is about $1200. While banks vary on this percentage, credit history plays an important part in the DTI that will be allowed.

Paying Down Your Debt Or Purchasing A Home

In the event that you have a DTI ratio that exceeds what your bank will allow, you will need to consider your debts before moving on to investing in a home. If you’re planning on purchasing a home in the next year, it’s a good idea to tackle high-interest debt first. However, if you happen to have a chunk of money saved up that you’re planning on putting into a down payment, it’s worth considering that putting more than 20% down may slightly increase the DTI percentage your bank will accept.

There are many fancy terms that go along with the world of real estate, but it’s important to understand what they mean so you can make them work in your favor. If you’re calculating your DTI ratio and are planning a home purchase down the road, you may want to contact your trusted mortgage professionals for more information.

Filed Under: Mortgage Tips Tagged With: Buying A Home, Home Buyer Tips, Real Estate Tips

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