LeSean McCoy on Getting Started in Real Estate Investing
LeSean McCoy is a former NFL player who now focuses on real estate investing, affordable housing development, and mentoring youth. LeSean McCoy and his girlfriend are focused on acquiring new properties in Harrisburg, PA and in the following article they explain how to get started in real estate investing.
Real estate has consistently been a solid investment. When the housing market is as scorching hot as it is right now across much of the United States, real estate investing is downright enticing.
Consider this: The average price of new homes has risen 14% in 2022 compared to the previous year and by 27% compared to 2020. The average list price as of March 2022? A huge $405,000, and it’s typically higher in large metro area markets.
If you’ve ever thought about dipping into home investing, LeSean McCoy’s girlfriend says that now may be a great time even if you’re currently in another field. Want to transition into real estate? Here’s how it’s typically done.
Financing Options Are Secured and a Business Plan is Created
LeSean McCoy and his girlfriend explain that real estate investing is like starting a new business. The transition to the field typically includes lining up different financing options and speaking to a few real estate agents to get a lay of the land in the area of investment.
The transition also includes reviewing what is involved in being a real estate investor and tactics for landing good real estate deals.
Financing options may be key. LeSean McCoy and his girlfriend say getting started in real estate investing means not receiving steady paychecks, so many new investors have financing secured as well as funds in reserve, whether it’s through a savings plan or 401(k) or other money set aside for the new venture.
Real estate investing experts typically recommend that even new investors put at least 20% down on a rental popular, think about cash flow loss that may creep up because of vacancies, and always keep a financial reserve to address regular maintenance and emergency repairs.
LeSean McCoy and Girlfriend on Picking Investment Strategy
LeSean McCoy explains that there are three primary categories within the world of real estate investment strategies. Before even finding the first investment, many real estate investing newbies determine which investment strategy they feel comfortable with.
Active strategy is the most hands-on form of investing. It can include everything from fixing up homes and flipping them, managing rental properties, selling to other investors, or even working as a licensed real estate agent to expand a portfolio.
Passive investment is less dependent on day-to-day work and results according to LeSean McCoy and his girlfriend. With this approach, real estate investors are comfortable with income streams that are more recurring than steady. Mostly passive investors may partner with other investors to target properties that can be managed by others.
A passive real estate investor typically goes in on real estate deals through crowdfunding or shares in a property portfolio that is already managed entirely by someone else.
Know the Ins and Outs of the Market
Success as a real estate investor means knowing your territory in order to figure out what is actually a good deal. A local market should be researched, with close attention paid to whether property values on the fair market are generally increasing or decreasing and the overall income potential of a specific property under consideration.
Finding the First Investment
Even if there’s a solid game plan outlined for real estate investing, it may be tough to nail down the best investment property to start with. LeSean McCoy’s girlfriend says that newbies usually decide whether they want to go with buying a rental or take out a mortgage for a single-family home.
Rentals can be tough since tenants need to be considered and it’s riskier in general than a single-family home for the investor to live in. Rental investors usually see a 9.4% average gross yield.
There are other factors to consider as well. Credit schools should be at least 620 and there should be a 20% down payment to get a fixed-rate mortgage for a single-unit property. Going the adjustable-rate mortgage rate? A 620 credit score is still the minimum but 15% down is needed for a single-family property according to LeSean McCoy and his girlfriend.
Funding the First Investment
LeSean McCoy says the first acquisition as a newly minted real estate investor may be a tad bit scary, but the good news is that there are several different approaches to consider.
Many investors opt for help through a Federal Housing Administration loan that insures a mortgage with just 3.5% down. There are also hard money loans, which provide quicker deal turnaround but with higher interest rates.
Non-bank lenders such as LendingHome are becoming increasingly popular for investors who may unexpectedly encounter mortgage qualification difficulties. Deals usually close in about two weeks with online lenders compared to up to two months with traditional banks according to LeSean McCoy’s girlfriend.
Other first-time real estate investors may hit up friends or families for loans at the beginning, especially if a deal seems like a very lucrative investment.