Stop Dreaming, Start Doing: The Financial Checklist for Your First Real Estate.

We’ll walk through the four non-negotiable checks you need to pass before you invest a single dollar. If you follow these steps, you’ll move from dreaming about wealth to strategically building it. Let’s dive into assessing your financial situation.

www.francoisentrepreneur.org

www.francoisentrepreneur.org

The first step is simple, but often avoided: know your numbers. We need absolute clarity on your current financial health. This starts with a comprehensive budget.

• Income, Expenses, and Debts: List all sources of income, detail every single one of your monthly payments, and total up all your debts. This isn’t about judgment; it’s about data.
• The Power of Disposable Income: The primary goal is to determine your disposable income, the money you can reliably and safely allocate toward investments. If you don’t know this number, you’re guessing, and entrepreneurs don’t guess. We calculate. Get that budget ironed out.

Once your budget is clear, the next critical metric is your Debt-to-Income Ratio, or DTI. This ratio is essentially a lender’s primary health check on you. It tells them if you can handle additional debt, like a new mortgage for an investment property.

• The Calculation: Your DTI is your total monthly debt payments divided by your gross monthly income.
• The Benchmark: We’re aiming for a DTI below 36%. Why 36%? Because this is often the optimal threshold that lenders look for to comfortably finance new real estate ventures. If your ratio is higher, your priority right now isn’t finding a deal; it’s debt reduction. Getting your DTI in check is your first investment.

Real estate requires capital upfront money for down payments and closing costs. But more important than the initial cash is your emergency fund. This is your financial shield.

• The Investment Buffer: You need accessible savings to cover unexpected expenses without having to jeopardize your investments. What if your rental property needs an immediate repair? What if you lose a tenant?

The 3-to-6 Month Rule: The goal is to save at least three to six months’ worth of living expenses in an easily accessible, liquid account. This cushion provides peace of mind. It ensures that when you start investing, you are doing it from a position of strength, not desperation. Don’t compromise your personal financial stability for an investment opportunity.