3 steps you don’t want to miss before asking for a loan

If you want to be a successful investor in real estate, you must ask yourself 3 questions before putting your money anywhere.

Where do you want to buy your house?

financial independence house 1

That question is really important to answer because it will determine the success of your future investment.

Buying a house in the middle of nowhere and rent it afterwards, doesn’t really look like success. Why? Because nobody will want to live in that house, the area is simply not attractive. So maybe you will get a low price when purchasing your property but finding a tenant will be as challenging as climbing the Everest.

So what do I mean by good investment? When your property takes value over time (x2 in 10 years in average) and that you can rent it at a good price to trustworthy people, I consider it as a good investment.

If you want to make a good investment you need to do some research. When doing it you will see that some locations are better than others. Here are some good one for example:

  • Cities (especially Capital where the real estate value steadily grows)
  • Suburbs
  • Places near malls, schools, shops, waterway
  • Safe location (that seems obvious but a lot of people would be tempted to buy low price house even if the area is dangerous)

What kind of home to you want to buy?

financial independence house 2

You need to determine whether you want a condo, a townhouse, a house… and also the size of your property.

What can you afford?

Get to know your income & savings

You want to know how much you bring home (net income after tax, insurance, pension and other contributions). To know it you can ask your HR department or use an online paycheck calculator.

Get to know your budget

The second thing you want to do is make a budget. You want exactly to know what goes in and goes out every month based on the salary your bring home. When doing so you could even make plans to optimize your expenses as I explain here.

Get to know your debt

If you want to invest in a house you will probably have to get into debt, but in good debts (the one that brings you money).

Now if you have bad debts (the one that make you poorer) you want to figure out how you can get rid of them as soon as possible because it could limit your buying power if you call on a bank.

Also read: How to get rid of tremendous debts in less than 7 years

Get to know your future expenses

You will probably face 2 kinds of expenses.

The first ones are the ones you have to pay right after you signed the contract to buy the house. That may be the cost involved in repairing a roof, a wall for example. It’s really important to consider those expenses because usually new buyers don’t take that into account. They save money only to buy the house but they don’t look at the other expenses that are relatives to buying a house. That often results in painful moment for them.

The second kinds of expenses are the one you will pay every month or every year. So you want to know what you can afford to spend every month for your future investment. If you rent your property you need to cover the following points:

  • Do you pay the bills (electricity, water) every month or does your tenant do?
  • You will also need to figure out how you will repay your loan. Do you use 50% of the money your tenant give you every month (maybe more or maybe less)?
  • If you buy a condo you will have to pay a monthly homeowner’s association fees
  • There are also the property taxes as well as insurance.
  • If your property investment is located far from where you live your transport expenses may be also increase.

So make an approximate calculation to have an idea of how much you can afford and also how much you can get after deducting all the expenses.

If you ask yourself those 3 questions you’re well on your track to make a good investment!


Simon Cave


If you want to learn the step by step process to invest in real estate the Becomer recommands:

Passive Real Estate Investing: How Busy People Buy 100% Passive, Turn-Key Real Estate Investments, Quit Their Jobs And Create A Safe, Stable, Monthly Income

The Wall Street Journal. Complete Real-Estate Investing Guidebook

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