How much money do I need to invest in real estate?
At Spartan Invest, we believe transparency is the cornerstone of any successful investment. Understanding the journey ahead provides clarity and builds trust. It’s a common assumption that investing in real estate is just for the wealthy, but everyone has to start somewhere. That’s why we’re committed to providing a clear and comprehensive breakdown of the costs associated with purchasing and financing a property. Here’s what you should know:
Upfront Costs to Invest
- Down Payment: This is a percentage of the property’s total cost that you pay upfront. It’s a part of the property’s value that you own outright from the start.
- Closing Costs: These are fees associated with finalizing the property transaction, including legal fees, title insurance, and processing fees.
- Cash Reserves: Cash reserves, are not paid to Spartan but it should be considered a part of your upfront plan on ANY property investment. This is your safety net of funds set aside to cover unexpected expenses related to your investment property. These funds are not intended for regular expenses like mortgage payments or property management fees.
- It is recommended that you have at least 6 months’ of rent set aside when purchasing a renovated resale property.
- If you’re purchasing a brand new construction property, we would recommend about 3 months, since you would not have as much unexpected maintenance.
Resale Turnkey
$165,000 Sale Price
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Down Payment: $33,000
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Closing Costs: $7,920
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Cash Reserves: $7,200
This is 20% of your estimated purchase price.
This is 6% of your loan's closing costs. This is usually around 3-6% of the purchase price.
We recommend having at least 6 months of rent on reserve. This example assumes a rental rate of $1,200 per month.
Build to Rent
$250,000 Sale Price
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Down Payment: $50,000
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Closing Costs: $12,000
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Cash Reserves: $4,800
This is 20% of your estimated purchase price.
This is 6% of your loan's closing costs. This is usually around 3-6% of the purchase price.
We recommend having at least 6 months of rent on reserve. This example assumes a rental rate of $1,200 per month.
Let's Chat!
Embarking on your real estate investment journey with transparency and clear expectations is crucial. Understanding the realistic costs involved, from down payments and mortgage obligations to closing costs and property management fees, lays the foundation for a successful investment.
It’s essential to remember that the figures and scenarios we’ve discussed are estimations and proxy figures for example purposes only. Real estate markets can fluctuate, and individual circumstances may lead to different outcomes. We at Spartan Invest are committed to guiding you through this process with honesty and clarity, ensuring you have all the information you need to make informed decisions. Schedule a call with our team for further clarification on your investment journey!
