Mortgage Lenders Blog and Resources

Guest Post by Lyle Solomon In theory, refinancing your mortgage is brilliant, especially now that interest rates are declining. Still, it may only sometimes be feasible or even desirable for some homeowners. To assess whether a refinance makes financial sense, homeowners should ask the following questions before making a decision. How can you qualify for refinancing? You must satisfy the requirements set forth by each lender to be eligible for a refinance. Find out from your lender what requirements you must fulfill in the following areas: Credit score Your credit score is a three-digit figure showing your history of handling credit and loans. You should be able to determine from your lender what credit score is required to be eligible for each loan form. DTI (debt-to-income) ratio Your DTI, expressed as a percentage, lets your lender know how much of your income is used for recurring, regular spending. If your DTI is high, you risk having fewer savings and missing mortgage payments. Your lender ought to be able to explain how to calculate your DTI and provide you with the maximum DTI required for each type of loan. Home equity The portion of your loan principal you have already paid off is your home equity. Before you may refinance, the majority of lenders demand that you have some equity in your house. You should be able to learn how to calculate your present home equity from your lender, as well as how much equity you require to be eligible for a refinance. Will your monthly payment go up or down? Your monthly payment will vary depending on the type of refinance you select. If you keep your term the same and refinance at a lower APR, your monthly payment will decrease. If you refinance to a longer term, your monthly payment will be reduced, but you'll pay more interest over time. If you refinance for a shorter period, your monthly payment will go up, but you'll own your house sooner. When you take a cash-out to refinance, your monthly payment often rises. Additionally, you could need to pay for private mortgage insurance (PMI) if your refinance leaves you with less than 20 percent equity in your home.  A unique form of insurance called PMI covers your lender to a certain extent if you default on your loan. Ensure your lender discloses any PMI requirements since this could significantly increase your monthly payment. Ask your lender how your monthly payment will change if you refinance. Your lender should be able to review the specifics of your loan and give you an accurate estimate of your monthly payment. What are the refinancing costs? The amount you'll pay will depend on several circumstances, but on average, refinancing costs 2 percent to 6 percent of the mortgage balance. These could be the loan size, the type, the length of the refinance, credit rating, and whether you're taking advantage of the equity in your property. You take on a new mortgage when you refinance. This implies that you are responsible for paying the new loan's closing costs.  You could have to pay the following closing charges when refinancing: Application fees for loans Origination fees for mortgages Cost of a home appraisal Title insurance Credit report fee Depending on the form of your new mortgage, you could need to pay additional costs. For instance, you will pay the VA funding charge, which ranges from 1.4 to 3.6 percent of the loan amount, if you are refinancing a VA loan. An upfront mortgage insurance cost is expected if you're refinancing an FHA loan. What are your available refinancing options? If you opt to refinance, finding the strategy that's best for you is essential. Compare different mortgage companies' refinance product offerings. Remember that one refinance option can be more appropriate for a specific circumstance than another, such as accessing your home equity. Determining your objectives is crucial before continuing with the refinancing procedure for this reason. Some of the most popular refinancing alternatives are shown below. Rate-and-term refinance Often known as a "standard refinance" by lenders, a rate-and-term refinance enables you to change the terms of your mortgage to ones that are more suited to your financial circumstances.  With this refinance, you may get a lower interest rate, alter the length of your mortgage, and alter your monthly payments. A rate-and-term can be wise if you want to enjoy low mortgage rates or pay off your mortgage faster. Cash-Out Refinance Homeowners may convert their home equity into cash through a cash-out refinance. In cash-out refinancing, your current mortgage is replaced with a new one with a higher principal balance. Your home equity withdrawal and the remaining mortgage balance make up the new mortgage amount. When the cash-out refinance closes, your lender will send you the cash sum you want to withdraw from your home equity. Homeowners who require a lump sum of money to pay off debt, bolster a savings account, fund a home improvement project, and other uses may find a cash-out refinance a fantastic solution. Cash-In Refinance You can refinance to raise your home equity by adding additional money to your mortgage principal rather than using the equity you've built up over time as cash. This type of refinancing, known as a cash-in refinance, enables you to swap out your existing mortgage for a lesser one after making a single lump-sum payment. You can obtain better loan terms with a cash-in refinance, such as a lower interest rate and smaller monthly payments. Furthermore, it assists in lowering your mortgage burden.It's not always necessary to refinance. Suppose interest rates rise, and you want to keep your current mortgage conditions the same. In that case, your lender may allow you to undertake a mortgage recast, a lump-sum payment that re-amortizes your loan over the remaining term for a reduced payment. Several mortgage refinancing options might be more appropriate for your circumstances. These include a no-closing-cost refinance, a reverse mortgage, an FHA streamline refinance, and a VA streamline refinance. Before making a choice, evaluate lenders and refinance product kinds. Refinancing: Is it my best option? Assessing your financial status and goals is crucial before determining whether or not to refinance. Do you want to shorten the time it takes to pay off your mortgage? Do you wish to lower your monthly payments? Do you require a lump sum of cash to pay off debt or support a home improvement project? Knowing your objectives will help you choose the best refinance and prepare you for the new loan terms. You should also consider your qualification criteria, such as your credit score, DTI, and home equity. If you can only refinance if you fulfill the lender's requirements, you'll need to wait and try to improve these things. For instance, improving your credit score may enable you to lock in a lower interest rate. The bottom line Finally, you should ensure that refinancing makes financial sense. Compare your possible future savings with the costs of refinancing. A refinance might not be for you if it doesn't seem like you'll make money. Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998 and currently works for the Oak View Law Group in California as a principal attorney.

Guest Post by G. Brian Davis If you’ve ever thought about buying an investment property, your first question was probably “How do I finance it?” Investment property loans don’t work identically to home mortgages. The underwriting standards are tighter in most — but not all — ways, and they inevitably cost more.  As you explore how to fund your first rental property or flip, keep the following differences in mind. Types of lenders Yes, you can borrow an investment property loan from traditional banks and mortgage lenders. But they’re slow, difficult to work with, and inflexible. Worst of all, most conventional loan programs only allow you to have up to four mortgages appearing on your credit report before they disqualify you.  Even if you use traditional mortgage lenders for your first few rental properties, you can’t use them forever. Instead, many rental investors turn to portfolio lenders: lenders who keep their mortgages on their own books — their own portfolio — rather than selling them off like traditional lenders do. These lenders charge comparable interest rates and fees to traditional lenders, sometimes slightly higher. But, they offer far more flexibility, since they don’t need to fit you into a rigid loan program to sell off your loan. That means they can also settle much faster than traditional lenders. Of course, you may not be in the market for a long-term rental property mortgage. If you plan to flip a house, you need a hard money loan: a short-term, purchase-rehab loan in order to have money to buy the property and money to renovate it. Compare interest rates, fees, loan terms, and more for investment property loans before you commit to a lender, as they vary widely. Minimum credit requirements The government backs several mortgage programs designed to help first-time buyers with bad credit become homeowners. The most well-known example is FHA loans, which allow you to buy a home with a credit score as low as 500. Real estate investors don’t get the same subsidies on the backs of taxpayers. While there are a few portfolio lenders who allow credit scores as low as 620 or even 600, most require a minimum score of 660 or 680. If your credit score sits below 700, expect turbulence when shopping for an investment property loan. In the meantime, work on repairing your credit. Start by paying off debts, especially high-interest unsecured debts such as credit cards. Income requirements Traditional mortgage lenders look at your debt-to-income ratio to determine how much to lend you. Your home mortgage is a personal expense, and they need to make sure you don’t overstretch your budget. But rental properties aren’t an “expense” in the traditional sense. Instead, they should generate positive cash flow for you. So instead, portfolio lenders calculate what they call “debt service coverage ratio” or DSCR. Rather than looking at your income, they look at the ratio of the property’s loan expenses to its market rent. The DSCR formula looks like this: Annual Net Operating Income (NOI) / Annual Debt Service. For example, say a property produces $6,000 in net income annually, after vacancy rates, management fees, repairs, and so on. If the annual cost of the debt service is $4,000, then the DSCR is 1.5: $6,000 / $4,000 = 1.5. Most investment property lenders require a minimum DSCR of 1.25. Interest rate and fees As a general rule of thumb, expect the interest rates on investment property loans to cost 0.5–0.75 percent higher than homeowner mortgage rates. So, if you would pay 5 percent for a homeowner mortgage in today’s market, expect to pay 5.5–5.75 percent for an investment property mortgage. Portfolio loans can cost a little more, perhaps one percentage point higher than homeowner mortgages. Expect hard money loans to cost more. They typically cost at least two percentage points higher than homeowner mortgages, and often closer to four or five percent. Then there are the fees. Mortgage lenders charge percentage fees called points, plus flat fees (also known as “junk fees” within the industry). Investors should expect to pay at least two points on investment property loans, and hundreds of dollars in flat lender fees. These higher fees and interest rates combine for overall higher APRs on rental property loans than homeowner mortgages, borrower beware. Down payments Many homeowner loan programs allow low down payments, such as the 3.5 percent down payment on FHA loans, 3 percent down payment on some Fannie Mae and Freddie Mac loans, and the famous 0 percent down payment on VA loans for military service members. You won’t be so lucky as an investor. Expect to pay a minimum down payment of 15 percent, and usually 20–25 percent or even higher if you have weak credit. That’s the bad news. The good news: portfolio lenders and hard money lenders allow you to borrow the down payment, unlike conventional lenders. That means you can tap into home equity loans, HELOCs, credit cards, or your rich Aunt Susan to help you come up with a down payment.   Final thoughts If you like the idea of investing in real estate but aren’t quite ready to buy a property, you have a few other options for investing. First, you can invest in real estate through crowdfunding platforms. Some allow you to invest with as little as $10. You can also buy shares in publicly traded real estate investment trusts (REITs). Some high-dividend REITs pay yields as high as 20 percent. Alternatively, you can invest in real estate syndications. They pay high returns, but come with high minimum investments unless you pool funds with friends, family, or an investing club. Lastly, if you like the idea of buying an investment property but worry you won’t earn enough yield in today’s market, you can always buy a vacation rental to list on Airbnb. As an added perk, you can use it in the off-season when vacancies are high. The bottom line: you don’t need to cough up a $50,000 down payment to start investing in real estate. Start with a strategy you’re comfortable with, and expand your real estate portfolio slowly from there.  G. Brian Davis is a real estate investor and co-founder of SparkRental.com, which helps everyday people build passive income from rental properties on the side of their full-time jobs. Brian’s goal is simple: to help as many people as he can reach financial independence, so they can cover their living expense entirely with rental income. Connect with him through SparkRental at any time.

Guest Post by Lyle Solomon Second mortgage — the phrase is enough to catch your attention. Why would you need a second loan on your home if you already have one? Second mortgages, commonly referred to as home equity loans, can be affordable financing to help you fulfill other financial dreams. And it would be worthwhile to consider what a second mortgage can accomplish for you when home equity is increasing quickly. What is a second mortgage? A second mortgage is a loan you take out against your property in addition to a primary mortgage. Home equity loans or home equity lines of credit (HELOC) are the most common examples of second mortgages. If individuals have enough equity in their property, they can borrow against it with a second mortgage, whether a HELOC or a home equity loan. Your home's equity is determined by deducting the balance of your outstanding loans from the total value of your house. It's not always possible to borrow the whole worth of your property. Banks and lenders typically only permit loans of up to 85 percent. For instance, if your home is valued at $400,000 (and is fully paid off), the most you could borrow would be $340,000. However, if you still owe $200,000 on your principal mortgage, you would only have $140,000 in equity for borrowing. When it does or doesn't make sense to take out a second mortgage There are a few scenarios when consumers should choose or ignore a second mortgage. Scenario 1 When you need a massive amount of money for home improvements, you can consider a second mortgage.  A prudent way to use your home equity would be to install a new kitchen or add a bedroom — two improvements that will almost certainly result in a significant boost in the value of your home. You can consider a home equity line of credit to plan for unforeseen housing bills. In older homes, leaking roofs or outdated heating systems may necessitate expensive repairs. You might be able to pay for it using a HELOC, which has a considerably cheaper interest rate than a credit card or unsecured loan. Since you borrow against the value of your home (which costs a lot of money), you can borrow up to 85 percent of your home's value. Home equity loans are secured loans and have a lower risk for lenders. For this reason, companies charge lower interest rates on these loans. Scenario 2 When you are in debt with high interest rates, you can consolidate them with a second mortgage. Since the interest rates of home equity loans are usually lower than credit cards, personal loans, or payday loans, you can use home equity loans to pay off all your unsecured debts. For instance, you can consolidate payday loans or credit cards with a home equity loan to eliminate high-interest loans.  Imagine you owe $10,000 on your payday loans at an interest rate of 350 percent. You may use funds from a second mortgage to pay off the payday loan because it would have a much cheaper interest rate in the long term. Debt consolidation is one of the smartest ways to use a second mortgage.  Scenario 3 Compared to home equity loans, cash-out refinances often offer lower interest rates. However, you could still be able to obtain a second mortgage if your lender denies your request for a refinance. Before you apply for a second mortgage, weigh all of your alternatives. Scenario 4 Your borrowing limit depends on how much equity you have in your home. If you don't have 15–20 percent equity, staying away from a second mortgage is better because this is the minimum eligibility criteria set by most lenders. Scenario 5 If you are not planning to stay at your home in the long term, it doesn't make sense to borrow a home equity loan. There is little point in increasing your debt load if you plan to sell your home within a few years. If the interest rate of a home equity loan is too high, there is no need to opt for it. What should you know before you get a second mortgage? There are lots of things you should be aware of before you apply for a second mortgage: You can lose your home to foreclosure in the event of loan default. You can get tax deductions for the total interest paid. The loan term can stretch from 1 to 20 years. The longer the loan term, the lower your monthly payments will be. Meanwhile, you have to make higher monthly payments for short-term loans. Talk about your financial situation with the lender and choose the best one for you. Long-term loans usually have lower interest rates. However, if you opt for a two-year loan term, the monthly payments will be pretty high. If you can't afford them, you will be in trouble.Always use a mortgage calculator to calculate your total interest payments and net savings before finalizing a deal. This is the best way to avoid mortgage debt. You must submit a few documents when applying for the loan. For example, a copy of your credit report, your recent tax appraisal, a copy of the property deed, your current mortgage statement, a copy of your bank statement, W-2s, a copy of your pay stub, your tax returns for the past two years, your proof of income, etc. You should fulfill the minimum credit score requirement. According to Experian, the minimum credit score requirement for a second mortgage is 620. A higher FICO score will help you qualify for better rates. Also, it is best if your debt-to-income ratio is lower than 43 percent. Final note The most vital thing is to use the money received from the second mortgage as effectively as possible, rather than using it to support your lifestyle. A second mortgage might be a good idea if you can use the money responsibly.  Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California in 1998 and currently works for Oak View Law Group in California as a principal attorney.

September 2022 — Best Company announces the top 10 mortgage lenders in Texas. Best mortgage lenders in Texas Companies are listed in their ranked order for the state of Texas, as listed on BestCompany.com. AmeriSave Mortgage {%company-card vertical="mortgages" company="amerisave"%} AmeriSave Mortgage is an online lender, and homeowners typically close on their AmeriSave mortgage loan in 25 days or less. On Best Company, AmeriSave has over 1,700 reviews and a 4.6 out of 5 star rating. Customers praise the company's patience and timeliness of service. New American Funding {%company-card vertical="mortgages" company="new-american-funding"%} New American Funding is based in California and was founded in 2002. The company offers a variety of loan types and a mobile app. According to customer reviews, New American Funding is nearly flawless. The company has over 500 reviews on Best Company and still maintains an impressive 4.9 out of 5 star average. Quicken Loans {%company-card vertical="mortgages" company="quicken-loans"%} Quicken Loans is the largest mortgage lender in the United States, and now goes by Rocket Mortgage. It offers services nationwide. According to reviews on BestCompany.com, Quicken Loans/Rocket Mortgage generally pleases its customers and offers top-notch customer service. Better.com {%company-card vertical="mortgages" company="better-com"%} Better.com offers online mortgage loans to its clientele and seeks to streamline the mortgage process by eliminating commission and lender fees. The company is based in New York. On Best Company, Better.com ranks 4.5 out of 5 stars in each of the following categories: quality, value, service, and trustworthiness. Zillow Home Loans {%company-card vertical="mortgages" company="zillow-home-loans"%} Zillow offers a variety of mortgage loan agreements and a helpful mortgage calculator. The company is based in Kansas and has been in business for over 20 years. Positive Zillow Home Loans reviews highlight the company's professionalism and competitive rates. Chase {%company-card vertical="mortgages" company="chase"%} Chase Bank offers mortgage loans as one of its many offerings, making for a highly convenient experience for customers already familiar with or using Chase's other bank or loan services. Chase mortgage loans only has about 130 reviews on Best Company, but the majority of these reviews are 4 or 5 stars. nkbc bank {%company-card vertical="mortgages" company="nbkc-bank"%} nkbc bank (National Bank of Kansas City) has been in business for nearly 25 years and offers nationwide services. The mortgage lender offers a streamlined, simple online application process. On Best Company, nkbc bank has incredibly positive reviews, with 98 percent of customers giving the bank 4 or 5 stars. Wells Fargo {%company-card vertical="mortgages" company="wells-fargo"%} Wells Fargo is a national bank that offers financing options for home buying and building in addition to its traditional banking and loan services. The company is one of the oldest in the industry, with over 160 years in business. Wells Fargo mortgage reviews on Best Company are somewhat mixed; 45 percent of reviews are 5 stars, while about 30 percent of reviews are 3 stars or fewer. Innovative Mortgage Alliance {%company-card vertical="mortgages" company="innovative-mortgage-alliance"%} Innovative Mortgage Alliance offers services in 16 states and an impressive three-week closing guarantee. The company is based in Utah. Customers of Innovative Mortgage Alliance praise the company for its responsive and knowledgeable staff. With only 1 review that isn't 5 stars, the company basically has a perfect rating on Best Company. WesLend Financial {%company-card vertical="mortgages" company="weslend-financial"%} WesLend Financial offers a variety of loan types and lower rates than you might see with other mortgage lenders. The company is based in California and services 36 states. On Best Company, WesLend Financial has a perfect 5 star rating with 28 reviews. Customers love the helpful staff and low rates. How we rank Company scores and rankings on Best Company are calculated through our Best Rank Algorithm. This algorithm is composed of the following factors and weights: Average score of reviews — 72.5% Volume of reviews — 22.5% Responsiveness to reviews — 5% To receive a score, a company must have at least 10 customer reviews left on its profile, and recent reviews carry more weight than older reviews.  We do have partnerships with some companies on our site, through which we receive compensation. However, this compensation does not affect rankings or review scores.

September 2022 — Best Company recently announced 2022's Top 5 Mortgage Lenders. Top 5 mortgage lenders Based on our ranking criteria, the following five mortgage lenders are our 2022 "Top 5": AmeriSave Mortgage CapCenter Evergreen Home Loans Better.com Zillow Home Loans AmeriSave Mortgage Overview Overall Score — 9.9 Best Company User Star Rating — 4.6/5 (based on 1,600+ user reviews) Loan Types — Purchase, Refinance, Fixed, Adjustable, FHA, VA, USDA Average Time to Closing — 25 days States Serviced — 50 Founding Year — 2001 AmeriSave Mortgage Reviews On BestCompany.com, 91 percent of AmeriSave Mortgage reviews are 4 or 5 star. The majority of AmeriSave customers are pleased with their experience with the lender and are quick to praise the following most often: Responsive customer service reps Attentive loan officers A quick and easy loan process (from application to close) Competitive rates and pricing AmeriSave further proves its commitment to a great customer experience by typically replying to all reviews left on BestCompany.com AmeriSave complaints are limited, but some customers indicate bad experiences with customer service and a delayed closing time. Learn More About AmeriSave Mortgage Learn more about AmeriSave Mortgage, what it offers, and what customers are saying about this mortgage lender. Learn More CapCenter Overview Overall Score — 9.3 Best Company User Star Rating — 4.9/5 (based on 10 user reviews) Loan Types — Purchase, Refinance, Fixed, Adjustable, FHA, VA Average Time to Closing — 21 days States Serviced — 5 Founding Year — 1997 CapCenter Reviews On BestCompany.com, 100% of CapCenter reviews are 4 or 5 star. However, it is important to note that CapCenter reviews are extremely limited in comparison to other mortgage lenders. Satisfied CapCenter customers most frequently highlight the following in reviews: Smooth loan process Reliable and professional loan officers No closing costs Learn More About CapCenter Learn more about CapCenter, what it offers, and what customers are saying about this mortgage lender. Learn More Evergreen Home Loans Overview Overall Score — 8.4 Best Company User Star Rating — 4.8/5 (based on 100+ user reviews) Loan Types — Purchase, Refinance, Fixed, Adjustable, FHA, VA, USDA Average Time to Closing — Undisclosed States Serviced — 6 Founding Year — 1987 Evergreen Home Loans Reviews On BestCompany.com, 93 percent of Evergreen Home Loans reviews are 4 or 5 star. Satisfied Evergreen customers are quick to mention the following in reviews of their experience with the company: Courteous and reliable customer service staff Easy and straightforward application process Quick closing time (often within 2–3 weeks) In addition to the following points above, many customers mention that they would recommend Evergreen Home Loans to their friends and family. Learn More About Evergreen Home Loans Learn more about Evergreen Home Loans, what it offers, and what customers are saying about this mortgage lender. Learn More Better.com Overview Overall Score — 8.1 Best Company User Star Rating — 4.7/5 (based on 520+ user reviews) Loan Types — Purchase, Refinance, Fixed, Adjustable, Jumbo, FHA Average Time to Closing — 20–30 days States Serviced — 47 Founding Year — 2014 Better.com Reviews On BestCompany.com, 96 percent of Better.com reviews are 4 or 5 star. As a newer company in the mortgage lending space, especially in comparison to many other top-rated lenders, Better.com has become a reliable mortgage choice for homebuyers. Satisfied Better.com mortgage customers are quick to highlight the following in their experience with the company: Low interest rates Reliable loan officers who keep customers updated at all points in the mortgage process Quick and easy application process Learn More About Better.com Learn more about Better.com, what it offers, and what customers are saying about this mortgage lender. Learn More Zillow Home Loans Overview Overall Score — 8.1 Best Company User Star Rating — 4.8/5 (based on 50+ user reviews) Loan Types — Purchase, Refinance, Fixed, Adjustable, Jumbo, FHA, VA Average Time to Closing — Undisclosed States Serviced — 50 Founding Year — 2000 Zillow Home Loans Reviews On BestCompany.com, 93 percent of Zillow Home Loans reviews are 4 or 5 star. Satisfied customers are quick to mention the following about their experience with the mortgage lender: Attentive loan officers (often mentioned by name) On-time closing Competitive rates and reasonable fees Zillow Home Loans is also responsive to all customer reviews on BestCompany.com, further demonstrating its commitment to its customers. Learn More About Zillow Home Loans Learn more about Zillow Home Loans, what it offers, and what customers are saying about this mortgage lender. Learn More How we rank The top five companies in any industry on BestCompany.com are determined by our "Best Rank" Algorithm, which is comprised of the following three consumer review criteria and their respective weights: Average Score of Reviews (72.5%) — The average 1–5 star score of a company's published consumer reviews. Volume of Reviews (22.5%) — The total number of a company's published consumer reviews. Responsiveness to Reviews (5%) — The company's rate of response to consumer reviews with a star rating of 3 or lower. Company rankings are updated on the 1st and 16th of each month to account for new reviews that a company will receive.

Guest Post by G. Brian Davis Not long ago, mainstream investment advisors considered real estate an “alternative” asset class. Only the wealthy diversified their portfolios to include real estate investments.  Today middle-class investors consider it a core investment in their portfolios. But with so many ways to invest in real estate, how should you go about it?  While rental properties and real estate crowdfunding platforms are far from the only ways to invest in real estate, they do make up two of the most common. Make sure you understand the pros and cons of each before committing your own money to either strategy. Pros and cons of rental properties I love rental properties as a source of passive income, but they come with their fair share of drawbacks too. Here’s what you need to know before investing. Pros Generate ongoing income Improve cash flow Leverage other sources to cover the cost of a rental property purchase Easy property management with digital tools Tax advantages Rental properties generate ongoing income, with no need to sell off assets. In fact, the cash flow from rental properties only improves over time, as rents rise but your mortgage payments remain fixed. And one day, your tenants pay off your mortgage for you entirely. Then your cash flow really takes off. Speaking of cash flow, you can calculate the cash flow for any rental property before buying it. That lets you accurately predict your returns before committing money, which you can’t do with investments like stocks. You can also leverage other people’s money to cover most of the cost to buy rental properties. That could mean financing 80 percent of the property cost with a rental property loan, and just coming up with the 20 percent down payment. Or you can use tricks like the BRRRR strategy to finance 100 percent of the property, by buying a fixer-upper with a hard money loan and then refinancing it after you complete the repairs, to pull your original down payment back out of the property. Modern technology also makes it easier than ever to manage rentals. Take advantage of rental property management software to handle tenant screening reports, advertising vacancies, and collecting rent. Finally, rental properties come with tax advantages. You can deduct all relevant expenses, plus some paper expenses like depreciation. Best of all, these deductions don’t require you to itemize your personal deductions, as they take place on a different tax return schedule. You can also take advantage of ways to defer capital gains taxes, such as 1031 exchanges. Cons Labor and skill required to find good deals Labor and skill required to manage a rental property Added level of difficulty to tax preparation For all those upsides, rental properties come with plenty of risks and challenges. To begin with, it takes both labor and skill to find good deals. While you can start with a typical real estate search through an agent, expect to pay market pricing for properties listed on the MLS. The best deals require you to find motivated sellers before other investors reach them. These include owners in foreclosure, or in tax sale, or going through a divorce. Or simply “tired landlords” who have been burned one too many times by deadbeat tenants trashing their properties or defaulting on rents. Learning how to market to these people — and actually executing that marketing — requires enormous effort on your part. Many new investors take real estate investing classes or online courses, or study under an experienced investor. Skimp on that education at your own peril. Once purchased, rental properties require labor and skill to manage. Screening tenants itself takes work, as do vacant unit repairs and cleanout, chasing down tenants for rents, ongoing maintenance and the occasional kitchen or bathroom remodel. Rentals also add bookkeeping wrinkles to your tax preparation, adding labor or cost to it.  Pros and cons of real estate crowdfunding Real estate crowdfunding investments come with their own ups and downs. Here’s how they compare with directly owned rental properties. Pros No additional skill, labor, or time necessary Low entry costs Broad diversification exposure It takes no skill, labor, or time to invest in crowdfunded real estate. You can spend two minutes creating an account, transferring money from your bank account, and you’re invested. Nor do you have to manage your investment after making it. You don’t have to hassle or budget for repairs and maintenance, or filling vacant units. The crowdfunding platform takes care of that for you, for truly passive extra income streams. You don’t have to learn any new skills either, such as identifying and marketing to motivated sellers, or overseeing renovations like investors flipping houses or doing BRRRR deals do. Some crowdfunding platforms let you invest with as little as $10. Compare that to investing $300,000 in a rental property — even if you took out a rental property loan for 80 percent of that, you’d still have to cough up $60,000, not including closing costs.  The low cost of entry also makes it easy to diversify your portfolio. You can spread money among platforms such as Fundrise, Diversyfund, and Crowdstreet for maximum diversification.  Even within each platform, you can often get broad diversification exposure. Fundrise spreads your money among pooled funds that own dozens of properties and hundreds of loans secured by real property, for example.  Cons Anyone can invest Higher entry barrier No control over returns on investments Despite those upsides, real estate crowdfunding has its own drawbacks.  Because there’s so little barrier to entry, anyone can invest. That cuts both ways, and means you won’t find oversize returns among crowdfunding platforms. Expect to earn average returns as an Average Joe investor.  Rental properties have a higher barrier to entry, with the higher costs, labor, and skill required. But experienced investors can earn high cash-on-cash returns by leveraging a rental property loan combined with scoring a good deal on purchase price. Unlike rental properties, you have no control over your returns on crowdfunding investments. You can’t tighten tenant screening practices or raise rents after improving the property. You’re stuck with whatever management decisions the crowdfunding company makes.  Many real estate crowdfunding platforms only allow accredited investors to participate as well, excluding most of the public due to regulatory reasons.  Which should I invest in? If you just want to add real estate to your investment portfolio, start with real estate crowdfunding platforms.  They let you invest passively with a small amount, to help you start diversifying. You don’t need any special skill to do so, and it doesn’t cost you any time. Start with Fundrise as a reputable option that lets non-accredited investors participate. You can get started with just $10, to help you start small and build confidence as you go.  Only consider expanding into rental properties if you plan on approaching it as a side business. Because that’s effectively what it takes: you have to learn a whole new skill set, and it will take ongoing labor to find deals and manage properties once purchased.  If you like the idea of investing in real estate as a hobby business on the side, then go for it. You can potentially earn high returns and take advantage of tax benefits. But don’t expect it to be easy, passive, or cheap to get started. G. Brian Davis is a real estate investor and founder at SparkRental.com, which helps middle-class people replace their day job with rental income. The company offers a wealth of free courses and tools, along with online landlord software that’s (mostly) free for landlords. He spends 10 months out of the year traveling overseas with his family and has an insatiable appetite for reading, hiking, and perfectly paired wine and food.

June 2022 — Best Company recently announced the seven mortgage lenders that earned the Great Customer Service Award in 2022. About this award The Great Customer Service Award is presented to companies that have a 4+ average service sentiment rating and a minimum of 50 user reviews on Best Company. Companies did not have to apply for this award. Rather, companies were selected based upon positive customer reviews, specifically highlighting customer service. Award recipients The mortgage lenders listed below are the recipients of the 2022 Great Customer Service Award. Lenders are not listed in any particular order. {%company-card vertical="mortgages" company="better-com"%} Better.com, founded in 2016, is an online direct mortgage lender that offers a fast and simple homeownership process. The lender sets itself apart with zero lender fees and non-commission loan officers. {%company-card vertical="mortgages" company="innovative-mortgage-alliance"%} Innovative Mortgage Alliance, headquartered in Salt Lake City, Utah, only serves 16 states. The lender offers a three-week closing guarantee and rate monitoring alerts. {%company-card vertical="mortgages" company="amerisave"%} AmeriSave Mortgage is an online, direct lender that has funded over $115 million in home loans. Borrowers can prequalify with no impact to their credit score and the lender prides itself on getting nearly 25 percent of customers to closing in 25 days or less. {%company-card vertical="mortgages" company="new-american-funding"%} New American Funding is a well-known mortgage lender, providing a variety of loan types with an on-time closing guarantee. The lender also offers a mobile app you can use to make payments and easily manage your mortgage. {%company-card vertical="mortgages" company="easyknock"%} EasyKnock is not a mortgage lender, but specializes in non-loan alternatives to convert equity to cash. One of the company's notable programs is the Sell & Stay Program which allows homeowners to convert their equity into cash without leaving their homes. {%company-card vertical="mortgages" company="acopia-home-loans"%} Acopia Home Loans, founded in 2007, offers its mortgage loan services across 20 states with a simplified loan process. Through the lender's mobile app, AcopiaGO, you can manage your mortgage, including completing the pre-qualification process and uploading documents. {%company-card vertical="mortgages" company="nbkc-bank"%} NBKC Bank is a full-service bank and well-known mortgage lender. With high customer ratings, NBKC offers basic loan options with a discount option for existing Costco customers through the Costco Mortgage Program. {%company-card vertical="mortgages" company="evergreen-home-loans"%} Evergreen Home Loans is a full-service mortgage lender licensed to lend in Alaska, Arizona, California, Idaho, Nevada, Oregon, and Washington. In addition to traditional mortgage products, the lender also offers home construction and renovation loans. A note on customer service Loan types, rates, and fees are typically similar across mortgage lenders. Experts recommend doing thorough research on the customer experience with a mortgage lender because this is what will set one lender apart from the others. One of the best ways to learn about a company's customer service is by reading reviews from past and existing customers.  Based on existing customer reviews on Best Company, we would recommend any of the mortgage lenders listed above based on customer service sentiment.

May 2022 — Best Company recently announced the seven mortgage lenders that earned the Customers Love Us Award in 2022. About this award The Customers Love Us Award is presented to companies that have 50+ 5-star reviews on BestCompany.com. Companies did not apply for this award. Qualification is based on the number of 5-star reviews that a company has received from past or present clients. Award recipients The following companies have received the 2022 Customers Love Us Award. Companies are not listed in a particular order. {%company-card vertical="mortgages" company="better-com"%} Founded in 2016, Better.com is a direct online mortgage lender offering a variety of loan types and a streamlined mortgage process that can get you to closing quickly. {%company-card vertical="mortgages" company="innovative-mortgage-alliance"%} Innovative Mortgage Alliance, founded in 2009 in Salt Lake City, Utah, specializes in residential financing and refinancing in 17 states. With a team of qualified loan originators, the lender offers a simplified loan process. {%company-card vertical="mortgages" company="amerisave"%} AmeriSave Mortgage is a direct mortgage lender that has funded over $115 billion in home loans and financed over 664,000 homes. A variety of loan types are available to finance or refinance a home purchase. {%company-card vertical="mortgages" company="new-american-funding"%} New American Funding, founded in 2002, is a well-known mortgage lender, offering a variety of loan types. The lender provides daily updated mortgage rates on its website.  {%company-card vertical="mortgages" company="quicken-loans"%} Quicken Loans (Rocket Mortgage) is the largest mortgage lender in the United States. It was founded in 1985 in Detroit and offers a variety of loan types and tools to make the mortgage process simple and convenient. {%company-card vertical="mortgages" company="acopia-home-loans"%} Acopia Home Loans services mortgages in 20 states. Founded in 2007, it is headquarterd in Goodlettsville, Tennessee. {%company-card vertical="mortgages" company="nbkc-bank"%} NBKC Bank is a full-service bank that is a Fannie Mae and Freddie Mac approved lender. The lender is part of the Costco Mortgage Program, offering homebuyers discounts on lender fees. A note on this award The Customers Love Us Award is based on the number of 5-star reviews that a company has received from customers. Mortgage experts recommend reading reviews while researching mortgage lenders. Customer reviews will provide you with greater insight on the customer service that a company provides, which can be more important to consider than rates and fees that are typically similar across mortgage lenders. Based on reviews, we would recommend each of the mortgage lenders outlined above.

One of the more daunting parts of buying a home, besides ensuring that you can afford the investment in the first place, is making sense of all the terms and jargon that accompany the process. To help you feel more confident in the homebuying process, we’ve compiled a list of 50 must-know mortgage terms.   A  |  B  |  C  |  D  |  E  |  F  |  H  |  J  |  L  |  M  |  N  |  O  |  P  |  R  |  S  |  T  |  U  |  V   Adjustable rate mortgage (ARM) An adjustable rate mortgage (ARM) is a mortgage loan type in which your interest rate will change based on overall market rates. Thus, your monthly payments will fluctuate throughout the life of your mortgage loan. The initial interest rate and monthly payment will be lower with an ARM, but both are subject to increase substantially. Amortization Amortization is the process of paying down your home loan by making regular monthly payments, reducing your debt over time. To amortize your mortgage, you will typically need to ensure that your payments cover both interest and principal. Annual percentage rate (APR) The annual percentage rate (APR) is the annual rate charged for borrowing money, versus a monthly fee/interest rate. Because your APR takes various costs and fees into account, it is typically larger than your interest rate. Appraisal A home appraisal provides the estimated value of a real estate property. Assets Assets are valuable items, resources, or property that you own and that have a cash value. Some examples of assets include checking and savings accounts, stocks and bonds, and 401(k) and IRA accounts. Your lender will verify your assets when you apply for a mortgage. Lenders assess your assets to ensure that you have enough money in savings and investments to cover your mortgage payments in the case of a financial hardship or emergency.     Balloon loan A balloon loan means that you will have one larger, one-time payment at the end of your loan term. This payment can be much higher than your usual payments, and if you’re unable to pay it, you may need to refinance your mortgage. Or, in some cases, you may face foreclosure.     Closing Closing is the last step in the homebuying process. At closing, the deed will be delivered and signed, closing costs will be paid, and you will be given the keys to your new home. Closing costs Closing costs cover the expenses associated with the homebuying process and transaction. Closing costs may vary by location and lender but typically include the loan origination fee, insurance fees, and attorney fees. Conforming loan A conforming loan is a type of home loan that is below a set dollar amount and that meets specific Fannie Mae and Freddie Mac funding criteria. Conforming loans are typically underwritten and funded by lenders and then sold to investors, such as Fannie Mae or Freddie Mac. Construction loan A construction loan is a short-term loan that is used to cover home renovation, construction, or rehabilitation projects. Contract of sale A contract of sale is a written agreement between a buyer and seller, conveying the title and that certain conditions have been met and payments have been made. Conventional mortgage A conventional mortgage is any type of home loan that isn’t insured by a government agency/entity. Co-signer/co-borrower A co-signer or co-borrower is someone who signs your loan and agrees to take responsibility for paying back the loan with you. If you have a low credit score or are experiencing difficulty in securing financing to purchase a home, a creditworthy co-signer or co-borrower can increase your chances of qualification, as well as help you secure better rates and terms.     Debt-to-income (DTI) ratio Your debt-to-income ratio is a percentage representing all your monthly debt payments divided by your monthly gross income. Loan underwriters will verify your DTI ratio to see how much income you have to cover mortgage payments after other debt payments are made each month. Deed A deed is a document proving that you own your home and have a title to the property. Discount points Discount points are an optional cost you can pay at closing to “buy” a lower interest rate. Typically, one discount point is equal to one percent of your loan and you will be required to pay points in cash at closing, thus increasing your upfront costs but reducing your monthly interest payment amount. Down payment A down payment is a portion of the sales price of a home that is paid at closing. A traditional down payment is 20 percent, but in most cases, a lower down payment can be made.     Earnest money deposit An earnest money deposit is a deposit a homebuyer pays to confirm a signed contract agreement to buy a house. The house seller or another third party (e.g. a real estate agent) holds the money until closing. When you close on a home sale, the earnest money can be applied to your down payment or closing costs. If the contract is terminated before closing for an acceptable reason, the money will be returned to the buyer. Equity Equity is how much money you have paid into your house — how much your home is currently worth minus the amount of remaining mortgage. Escrow Escrow covers property-related expenses like homeowners insurance or property tax. Typically, your mortgage lender will set up an escrow account for you, and a portion of your monthly payment will go into your account, covering additional property expenses.     Fannie Mae The Federal National Mortgage Association (Fannie Mae) is a U.S. government-sponsored agency that provides mortgage options to low- and moderate-income homebuyers. To increase affordable lending, Fannie Mae purchases and backs mortgages from lending institutions. FHA loan An FHA loan is a government-insured mortgage backed by the Federal Housing Administration. FHA loans are a great option for first-time homebuyers because they typically have lower down payment and minimum credit score requirements, making it easier to qualify for financing. Many private lenders offer this loan type. Fixed rate mortgage A fixed rate mortgage is a type of loan that has a set interest rate at the time of mortgage purchase that will never change throughout the life of the loan. Foreclosure If you fail to make your monthly mortgage payments, one possible consequence is foreclosure, through which your lender or servicer takes back your property. If the foreclosure process is initiated, your lender or servicer is generally required to send you notification. Some foreclosure proceedings involve a court process, but not all. Freddie Mac The Federal Home Loan Mortgage Corporation (Freddie Mac) is a U.S. government-sponsored agency under the direction of the Federal Housing Finance Agency (FHFA). Freddie Mac purchases mortgage loans from lenders and servicers to promote affordable lending practices.     Home equity line of credit (HELOC) A home equity line of credit (HELOC) allows you to borrow money against your home equity. A HELOC is a line of credit, meaning that you withdraw funds as needed, not all at once, and you will typically have an adjustable interest rate. There will be a determined “draw period” for your HELOC, which will allow you to draw funds during a set period of time — once the period ends, you will no longer be able to withdraw funds. You will be required to make minimum payments throughout the draw period, and you may be required to pay your complete balance when the draw period ends. Home equity loan A home equity loan allows you to borrow money against your home equity. You will receive funds as a lump sum, and you will typically have a fixed interest rate. Home inspection A home inspection is typically part of the homebuying process. It is important to order a home inspection to ensure that the home’s structure and systems are in good repair. Homeowners insurance Homeowners insurance is a form of insurance that can cover losses or damages to your home. It typically covers four types of damage: interior damage, exterior damage, loss or damage of personal belongings, and injury that may occur on your property. Homeowners insurance shouldn’t be confused with a home warranty or mortgage insurance.     Jumbo loan A jumbo loan is a type of home loan that exceeds the limits set by Fannie Mae and Freddie Mac. These loans have higher credit score requirements and are typically reserved for the purchase of luxury properties.     Loan-to-value (LTV) ratio The loan-to-value (LTV) ratio compares your mortgage amount to the value of your property. Lenders may consider your LTV ratio to determine whether or not they will lend to you, as well as whether or not they’ll require you to pay private mortgage insurance (PMI). The higher your down payment on a property, the lower your LTV ratio will be.     Mortgage  A mortgage is a specific type of loan used for a property or home purchase. Mortgages are commonly offered by private lenders, brokers, banks, and credit unions. You will be required to make monthly payments on your mortgage payment, including interest, for the set term of your loan.     Non-conforming loan A non-conforming loan is a mortgage loan that doesn’t meet the Fannie Mae and Freddie Mac guidelines, thus disqualifying it from being sold to either government-sponsored enterprise. These types of loans typically have higher interest rates.     Origination fee An origination fee is a fee charged by a mortgage lender to cover the cost of processing a loan.     Pre-approval Pre-approval is a preliminary assessment of whether or not a lender will lend to a specific borrower. If you, as a borrower, are approved, you will typically receive a pre-approval letter, which can be used as a confirmation of financing when placing an offer on a house. Pre-qualification Pre-qualification is not the same as pre-approval. Pre-qualification simply gives you an idea of how much you would qualify for for a loan, but is not binding in any way. Principal The principal is the amount that you have to pay back on your mortgage. Your monthly payments will include a portion of the principal, ensuring that you pay back your borrowed amount in full. Private mortgage insurance (PMI) Private mortgage insurance (PMI) is a type of insurance for your lender if you make a down payment under 20 percent. Once you’ve accumulated a certain amount of equity in your home, you should be able to cancel your PMI. Property tax Property tax is typically charged at a local level based upon the value of your property. Property taxes are typically collected through your monthly mortgage payment and will be added to your escrow account. If you don’t have an escrow account, you will be responsible for paying the property taxes directly.     Real estate agent A real estate agent is a licensed real estate professional who represents either a buyer or seller in a real estate transaction. You typically don’t pay a real estate agent directly — they are typically compensated through a percentage of the property’s purchase price. Refinance Refinancing refers to the process in which you replace your loan with another to secure better rates and terms. Reverse mortgage A reverse mortgage is reserved for homeowners who are 62 years of age or older, and allows them to access their home equity. Reverse mortgages are different from home equity loans or home equity lines of credit (HELOCs) because instead of the homeowner making payments to a lender, the lender will release funds to the homeowner. The money you receive, as well as interest, will increase the balance of your loan each month.     Settlement Settlement is the final stage in a real estate transaction when the ownership of the property is transferred from seller to buyer. Short sale A short sale refers to a home being sold for less than what remains on the existing mortgage. It is an alternative to foreclosure, but because the home is being sold, you will be required to leave.     Term The term of your mortgage is the set amount of time that you will be making monthly payments to completely pay off your loan. Typical mortgage loan terms range from 15 to 30 years. Title A title is the physical document that states that you own your home or property. The title will also show past property owners, as well as a description of the property.     Underwriting Underwriting is part of the mortgage process in which you, as a borrower, are assessed as an acceptable risk by your lender. An underwriter will analyze your documentation, credit history, and financial history, after which a lending decision will be made. There are typically fees associated with the underwriting process that you will pay as part of your closing costs. USDA loan A USDA loan is a government-insured loan backed by the U.S. Department of Agriculture (USDA). This mortgage program is reserved for eligible rural properties that are outlined and approved by the Rural Housing Service. Typically, USDA loans have a 0 percent down payment and favorable rates.     VA loan A VA loan is a government-insured loan backed by the U.S. Department of Veteran Affairs (VA). This mortgage program is reserved for U.S. military service members, veterans, and eligible spouses, and helps them buy homes. The VA guarantees a portion of the loan, reducing the risk of loss for a lender, and this loan type typically has a zero down payment with favorable rates. Variable interest rate A variable interest rate refers to a rate that will fluctuate throughout the life of your mortgage loan. You will typically have a lower starting rate, but it is very likely that your rate will rise as the market experiences various ebbs and flows.

Guest Post by G. Brian Davis Want to start investing in real estate, but don’t have tens of thousands of dollars for a down payment?  You have more options than you realize. From directly buying properties to buying shares in real estate funds, try these tactics to diversify your portfolio to include more real estate.  1. House hack House hacking involves finding ways to generate income from your home, to offset your housing costs. In the classic house hacking model, you buy a duplex to live in one side and rent out the other. Traditional mortgage lenders also allow triplexes or fourplexes.  And if low-end units come to mind when you think of multifamily properties, think again. You can house hack with extremely high-end multifamily properties.  If you don’t like the idea of sharing a wall with someone else, you can also house hack single-family homes. I’ve house hacked with housemates, and I have a friend who’s house hacked by renting out a suite in her apartment as a vacation rental. My business partner has house hacked by hosting a foreign exchange student whose monthly stipend covered most of her mortgage payment. She’s also rented out storage space in her garage to help cover her mortgage. Other homeowners add an ADU to house hack.  When you house hack, you take out a conventional owner-occupied mortgage, which means a low down payment. For example, programs like Fannie Mae’s HomeReady and Freddie Mac’s Home Possible allow a 3 percent down payment, and FHA loans allow 3.5 percent down. Some specialty loan programs such as VA loans and USDA loans allow 0 percent down. You must live in the home for at least one year, but then you can move out and keep the property as a rental if you so choose. House hacking makes for a cheap and easy way to start your real estate portfolio. 2. Use a credit line for the down payment While most conventional mortgage programs don’t allow you to borrow the down payment, portfolio lenders and hard money lenders do typically allow it. If you have equity in your home or an investment property, you can open a home equity line of credit (HELOC) against it and pull out money for a down payment. The tactic works particularly well for buying fixer-uppers to flip or refinance using the BRRRR strategy. You can then pay off your HELOC balance in full just a few months after drawing on it. Also check out all-in-one first lien HELOCs as an option for pulling out money for a down payment.  3. Fractional ownership in rental properties Alternatively, several companies nowadays let you buy fractional ownership in rental properties.  For example, Real Wealth offers both group investments and rental fund syndications. You can also check out Arrived Homes and Roofstock One, which both offer fractional ownership.  Arrived Homes is available to non-accredited investors, and lets you invest with as little as $100.  4. Crowdfunded loans Some hard money lenders and other sources of alternative financing allow you to invest money toward specific loans on their books.  My favorite of these is Groundfloor, which lets you put as little as $10 toward any given loan. They allow non-accredited investors to participate.  Accredited investors can also try PeerStreet, which works similarly.  I particularly love that these offer one of the few ways to invest in real estate short-term. Assuming the borrower repays on schedule, you get your investment back with interest in just 3 to 18 months.  5. Private REITs As another type of real estate crowdfunding investment, you can invest in private funds that own properties or debts secured by real estate.  Unlike their publicly-traded counterparts, you buy shares in private real estate investment trusts (REITs) directly from the company that owns the assets. That makes share prices far less volatile, but it also makes shares harder to sell. Most crowdfunded REITs impose penalties if you sell shares back to them within the first five years.      Some private REITs allow non-accredited investors to buy shares. For example, Fundrise lets you invest with as little as $10.  Before investing, make sure you understand how crowdfunding works, and do your homework on the best crowdfunding companies. 6. Publicly-traded REITs Want more liquidity, to sell shares at a moment’s notice? You can buy shares through your regular brokerage account, or through your IRA. Even better, you can sell your shares at any time to other investors on the open market.  But that liquidity comes at a cost. Public REIT share prices are far more volatile than private REITs, which adds to the risk.  As for how much you need to invest, you can buy a single share at its going price, often as little as $10 to $20. Some brokerage platforms allow you to buy fractional shares as well, letting you invest in any company for whatever you have available in your account.  To get started, research the best REITs for beginner investors.  7. Real estate stocks If you like investing in real estate through your brokerage account, you can also look beyond REITs to industries related to real estate. For example, you can buy shares in homebuilder stocks, or in funds that own many different homebuilder companies.  Likewise, you can buy shares in home improvement retailers such as Home Depot or Lowes. Or you can buy shares in real estate tech platforms like Zillow. For that matter, hotel chains own massive amounts of real estate, tying them to the industry as well.  Get creative as you research real estate stocks and companies with strong ties to the real estate sector.  Final thoughts You don’t need thousands of dollars to invest in real estate. Depending on how you invest, you can get started with as little as $10.  If you like real estate crowdfunding investments, start with Fundrise and Groundfloor as easy and affordable options. If you prefer publicly traded stocks, check out beginner REITs and funds that own homebuilder stocks.  And if you want to buy properties directly, consider house hacking to buy your first real estate investment.  Whatever you do, don’t fall prey to analysis paralysis. Just get started, and keep learning a bit more about real estate investing every day.  G. Brian Davis is a real estate investor and founder at SparkRental.com, which helps middle-class people replace their day job with rental income. The company offers a wealth of free courses and tools, along with online landlord software that’s (mostly) free for landlords. He spends 10 months out of the year traveling overseas with his family and has an insatiable appetite for reading, hiking, and perfectly paired wine and food.