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Becoming a Real Estate Investor: Credit, Retail and More

real estate investor credit

In part one of this two-part blog series, we went over some of the basic themes for getting started as a real estate investor. This is a great way for many people to earn money, even those who have another job and aren’t necessarily entrepreneurs, and it’s important to have the proper themes set out if you’re looking to enter this realm.

At Primary Residential Mortgage, we offer several mortgage types that are often used by real estate investors, from conventional loans to specialty programs like jumbo mortgage loan, USDA loans and many more. What are some of the major considerations you should be keeping in mind if you’re looking to become a real estate investor? Today’s part two of our series will cover a few additional areas to look at.

Credit Factors

Just like anyone buying a new home or considering such a purchase, one major factor for real estate investors is their credit history and related credit score. Before investing in any real estate, you should be checking your credit score and confirming it’s high enough to qualify for certain robust mortgage programs.

If you find this is not the case, there are a few avenues to pursue. Firstly, confirm that the credit report is correct through your credit bureau – errors do happen that might lower your credit score, but it will go back up if you note the error and have it removed. And whether or not there are errors on your report, you can always improve your credit score by paying down past debts, avoiding missed payments and keeping your debt-to-income ratio low.

Full Retail?

As a real estate investor, one area you want to try avoiding wherever possible is a bidding war. These kinds of things usually end up in the winning party paying full retail for the home – and this is not necessarily the best way to build up your investment portfolio. At the same time, if a property is coming at a major discount, you must fully understand why the price is lower. Are major repairs necessary? If so, this should be factored into the purchase price along with loan terms and other closing costs.

Owner vs. Tenant Occupation

Most homes for sale are owner-occupied, but you will also see some on the market that are tenant-occupied – that is, owned by someone else who rents the property to tenants. In some cases, those looking to invest in a rental property will be the ones most interested in these properties.

While sellers here will claim they’re saving you the trouble of fixing up and then marketing the rental property, be careful here. Inheriting tenants can be very risky for a few reasons, so be sure you do your homework here before signing anything.

For more on what to consider if you’re trying to become a real estate investor, or to learn about any of our mortgage loans or related services, speak to the staff at Primary Residential Mortgage today.

*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.

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