10 Tips for Real Estate Investing: III
by Michael Lam | Jan 30, 2016
Continued in depth series of the Top 10 Tips for Real Estate Investing, part III of III. In this series, understanding your debt, building out your network, and sharing knowledge are discussed in more details.
Tip 8: Understand DTI and ADTI
Any good investor must understand their own purchasing power. Generally, purchase power is comprised of the DTI ratio. It is value calculated by a lender. As an investor who doesn’t depend on one lender, it’s important that one can quickly calculate purchasing power and leverage or anticipated influx of income that changes the leverage of OPM. In addition, it’s important to understand ADTI (Additional Debt to Income ratio). In short this the additional debt one can consume before surpassing a target DTI ratio. Go to this link to read more in depth of DTI and ADTI
Tip 9: Find a trusted lender
A trusted lender is your eyes on the street while your 50,000 feet high focusing on the large picture. Lenders are on the grown floor and will tell you how the market is. They are leading indicators to the market, as most transactions in real estate will require a mortgage application. When there is a higher than usual volume of application, this generally means a seller market. More buyers than sellers. If you can find a lender that does a lot of volume and is consistent in performance, the lender will be able to tell you how he/she is doing in terms of her business. In a slow market or low performing real estate market, mortgage application will be lower than usual. Lenders will be the first to disclose symptoms of the market. It’s important the lender you choose to work with is honest and have your best interest. If you don’t have a lender have a look here of Michael Quihuiz He is a lender I have personally worked with and has been instrumental to some of my deals.
Tip 10: Build out a network
Successful people hang out with successful people. Successful investors are attracted to other successful investors. It’s important you socialize with like-minded people and to build out your network of professionals across several lines of business professions you closely work with. This means growing your network of real estate agents. Having just one agent will not be sufficient when you become more fluid in the real estate game. Having only one lender puts you in a narrow product offering. Having limited contractors, you work with puts you at risk of losing money when they don’t deliver. Its important to expand your network and to meet as many people in the real estate industry. By doing this, it diversifies your reach and risk and puts you in position to capitalized on opportunities within your network.
Tip 11 (bonus): Spread and share your knowledge
When you become a successful real estate investor. Remember reading this blog and how much advice I have given. It’s important to share the wealth of knowledge. I have learned a lot from others before me and I have no reservation passing down what I’ve learned to my readers. If we can pass down and help another individual become successful, it in turns creates more opportunities for others and contributes a small part in keeping the real estate industry humming. Multiply this by million investors and you have yourself a self-sustainable industry.
Also please if you like this article, please subscribe to my newsletter and you’ll be the first to get notification of awesome new articles. Please share this blog with others within your network. If you’d like to go back to the other tips discussed, you can quickly navigate to them here below:
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