5 Hacks For First Time Home Buyers
It’s a well known fact that investing in Real Estate can make you rich.
Buying, holding, and flipping real estate probably makes more millionaires than any other investment vehicle.
While a lot of “First Time Home Buyers” may realize that their home is an investment, most are more concerned with stuff like room sizes, paint colors, and proximity to work/schools, then they are with the kind of the long term “Return on Investment” that they’ll get from their first real property asset.
Good news is, you can “have your cake and eat it to.”
Meaning, it’s totally possible to find yourself a suitable home AND make sure it also functions as a long term wealth building vehicle.
Here’s 5 “Hacks” that’ll help you get there.
Hack #1 – Minimize Your Down Payment By Getting A “Seller’s Assist” For Closing Costs
When it comes to “Return on Investment” what we’re really talking about is the percentage return you get on the actual cash that you lay out. A lot of buyers don’t realize is that a lot of mortgage products will allow them to ask the seller of the property to pay a portion of their closing costs… (usually 3 or 6%). The seller might ask you adjust the price upwards in order to compensate for this, but at the end of the day you could keep thousands of dollars in your pocket and increase long term ROI.
Hack #2 – Use Local First Time Home Buyer Programs To Finance Your Downpayment
Many local goverments have programs in place to incentivize home ownership. A common way that they do this is by allowing you to finance your down payment separately from the rest of your mortgage, usually at a preferred interest rate. To find out whether these programs exist where you’re buying, try googling “first time buyer programs” in your area, or simply ask a local realtor or mortgage lender and they’ll let you know what programs exist.
Hack #3 – Focus On Properties With Motivated Sellers, Then Make “Low-Ball” Offers
When it comes to investing in real estate, most of the money is actually made when you buy, NOT when you sell. If you can buy a property at below market value, you’ll have instant equity from day 1, and this is very possible to accomplish if…. 1. You’re willing to be patient and don’t get too emotionally tied to properties. 2. You have a patient, hardworking real estate agent who’s ok with working with you on this strategy. Tactically, here’s how to do this… Ask your agent to send you a lists of properties with recent price reductions. You can also focus on properties that have been on the market for a long time, because it’s always possible the seller is getting frustrated. And one other tip would be to focus on properties with the word “motivated” in remarks section. All of these could indicate that a seller is willing to accept or at least counter-offer (and not be insulted by) a “low ball” offer.
Hack #4 – Buy A Multi Unit Property – Live In One Unit, Rent Out The Other
This idea isn’t for everybody, but if you don’t mind being a landlord from day 1, you can really set yourself up for some healthy long term wealth creation by buying a multi-family income property.
You can live in the nicest unit, then use the rental income from the other units to help reduce your monthly mortgage payment. Plus, you can also use the income from extra units to increase the amount of mortgage you qualify for, which might help you get into a specific neighborhood or school district that you think you’re priced out of.
Lots of savvy first time buyers will buy a multi-family property as their “starter home” then in a few years, move out into dream home, while holding the first house as an asset.
If you’re smart about using your cash flow, and leveraging the equity in this first property to buy more income producing real estate over the years, this idea alone could very well accelerate your wealth and make it possible to retire 10, 20, even years earlier than you might have otherwise…
Hack #5 – Use “Fixer Upper Financing” To Create Equity For Yourself From Day 1
It’s surprising that more energetic young buyers don’t take advantage of a few of the awesome mortgage programs out there that will allow you to finance both your acquisition costs AND the cost of repairs.
These programs give you the opportunity to
- Renovate A Property Exactly To Your Specifications/ Tastes
- Get Money For The Repairs
- Enjoy Equity From Day 1 (If you buy smart, there’s usually a value reward for taking the trouble to do/oversee the work)
And, usually these programs will allow first time home buyers to get started with relatively low down payments.
For more information on these fixer financing programs, and implementation of any of the other hacks above use the form below to request a quick mortgage quote and pre-approval letter now…