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Real Estate Investment 101

Everything you need to understand residential and commercial real estate investing — from your first deal to building a portfolio. Plus: a special guide for foreign investors entering the US market.

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Types of Residential Investments

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Single Family (SFR) — Easiest to finance, manage, and exit

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Duplex/Triplex/Fourplex — Multiple income streams, still residential financing

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Vacation Rental (STR) — Higher income potential, higher management intensity

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BRRRR Properties — Buy distressed, force equity through rehab, refinance & repeat

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House Hacking — Live in one unit, rent others — offset your mortgage

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Key Numbers Every Investor Must Know

Cap RateNOI ÷ Purchase Price

Cash-on-Cash ReturnAnnual CF ÷ Cash Invested

Gross Rent MultiplierPrice ÷ Annual Rent

1% RuleMonthly rent ≥ 1% of price

DSCRNOI ÷ Annual Debt Service

70% ARV Rule (BRRRR)(ARV × 0.70) − Repairs

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Financing Options

Conventional Loan — 20–25% down, best rates, most used

DSCR Loan — Qualified on rental income, not personal income

Hard Money — Fast close, short term, higher rate — great for flips

Seller Financing — Flexible terms, no bank, negotiated directly

Subject-To — Take over existing mortgage, powerful for creative deals

HELOC / Cash-Out Refi — Tap existing equity to fund next deal

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Common Mistakes to Avoid

✕ Skipping proper due diligence — always verify everything

✕ Underestimating repair costs — add 15–20% buffer

✕ Not accounting for vacancy — use 5–10% vacancy factor

✕ Overleveraging — keep debt service coverage above 1.25x

✕ Buying in emotion — numbers must work without appreciation

✕ No entity structure — always invest through an LLC

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The Residential Investment Roadmap

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Set Goals

Cash flow vs appreciation? How many doors?

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Form LLC

Protect assets before your first deal

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Analyze Deals

Run numbers on 20+ before making an offer

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Due Diligence

Title, inspection, financials, zoning

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Close & Manage

Close the deal, place tenants, build equity