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You may think investing in real estate is something only millionaires can afford, but think again. Anyone can be a real estate investor—you just got to know the right steps to take.

Real estate is one of the most common ways consumers build wealth over time, and with rental property, along with the increase in equity, the property cash flows each month. The rent received is more than enough to pay for the mortgage, taxes, and insurance in most instances. With fixed rates in their current range, the principal and interest payment will never rise, even when rental rates do just the opposite.

Financing an investment property requires at least a 20% down payment, but you can get a slightly better rate with a 25% down. Your agent can find an ideal property that provides you with a solid monthly cash flow every month.

One caveat when buying your first rental—you’ll need to qualify for the new mortgage without the benefit of the income from the unit. Lenders need to see at least two years of landlord experience before allowing rental income to be counted. Lenders verify that experience by reviewing Schedule E from your federal income tax forms, which shows rental income and expenses.

But you’ll be surprised to find out that many first time real estate investors ultimately own multiple properties. Why?

Once you pass the landlord test, that rental income can be used to offset part or all of the financing costs, including taxes and insurance. When you find a property that cash flows, all you need is the down payment—you no longer need to qualify without the new rental income.

There are other guidelines for investor property loans, but this is the biggie. Let the renters pay your mortgage for you.

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