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Taking the First Step:

Becoming a Real Estate Investor

Larry Baker, Realtor®

Taking the First Step: Becoming a Real Estate Investor

 

Do you remember your first real estate investment? I find that most investors do. Whether it was a big pay day or a financial fiasco, it was your first step on the road to building wealth through real estate.


Thanks to record-low interest rates over the past years and an increase in wealth—U.S. households gained $13.5 trillion in wealth in 2020 according to the Federal Reserve—I’m seeing a new generation of real estate investors.


I’m often asked for tips on how to start a real estate investment portfolio—and start growing wealth. For new investors, I recommend beginning with an owner-occupied purchase or a single-family rental property.


Owner-occupied: This is a multi-family property where you would live (your primary residence), while renting out the spaces/units you’re not using to generate income. Owner-occupied allows you to tap into attractive financing that is typically reserved for homeowners, making your entry into real estate investment more affordable. First-time investors also find it more financially viable to manage a single mortgage (one mortgage for both your primary home and investment property) than to finance multiple properties.


Single-family rental: With this option, you'd be buying a traditional home built for one family or household. The rent you collect is applied toward paying off the mortgage and maintaining the home, with surplus as income. Single-family rentals provide tax write-offs, a passive rental income, and long-term capital appreciation.


Whether you’re a first-time investor or a seasoned pro, there are two key partners you need on your team—a trusted Realtor® and a lender. A Realtor® experienced in investment properties can pinpoint undervalued, off-market properties, and advise you through the purchase process—helping you avoid common mistakes, such as overpaying for properties, underestimating repairs, or overpricing rents. Your Realtor® is also a great resource for finding a lender you’re comfortable working with. Your lender helps determine your borrowing power, walks you through financing options (conventional, hard money, and private money loans, or tapping home equity for your purchase), ensures you meet criteria for investment borrowers, and provides a financing package that protects your interests. 

 

An annual Gallup poll found that Americans view real estate as the best long-term investment—far outweighing stocks, gold, and savings accounts. Even when inflation is rising, as it is today, Americans agree that investment in real estate pays off. It’s no wonder that more buyers are looking to build a solid financial future by starting with a real estate investment portfolio.

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LARRY BAKER

Realtor® | Real Estate Investment Specialist

Ram Real Estate Group

Coldwell Banker Realty

larry@rakeshram.com

(513) 703-7774