6 Tips To Invest in Real Estate as a Nurse (with Mortgage Expert Ivan Simental)

If you’ve been considering buying a home or investing in real estate in another way, there are definitely some considerations to make. Owning your own home has many advantages, noted Nurse Alice, because you’re paying yourself for your living space instead of someone else (who’s making money off of you). 

But that doesn’t mean you should just jump right in—here’s what mortgage loan officer Ivan Simental recommends nurses do before investing.

#1: Get with a trusted professional

The first and most important thing Simental advises listeners to do is find a trusted professional, like a loan officer, who can help them in their journey to homeownership or property investment. He suggested asking family members, scouring social media, or checking reviews to find someone you vie with. 

Once you find that person, you can outline your plan, and the right professional will be able to tell you exactly what steps you need to take—from getting your finances in order to build up your savings to getting your employment history on track—to make that plan a reality. 

He recommended you find a professional ASAP, even if you’re not looking to invest for another year or two. 

“It's better to have an action plan in place so that a year from now, when you want to get started, you're not like, ‘Oh man, I wish I would have had this plan a year ago,’” he pointed out. “So get with a trusted professional, come up with a plan, and let them know your goals. There are many options that are available for nurses or just for individuals in general so that you can set yourself up for strategic and financial freedom in the future.”

#2: Consistency is key 

For travel nurses, who may have gaps in income due to different assignments, Simental notes that what loan officers and mortgage lenders are going to be looking for is consistent income for at least two years. Even if there are weeks off in between contracts, the important thing is to know that as long as you have W2s that show consistent income, you should be good to go. 

For brand-new travel nurses who want to purchase a home through traditional financing, Simental recommends that they plan on working hard and consistently for at least two years. You can take a week or two off between assignments, but if a home or other real estate purchase is your goal, consistent annual income is needed to make that happen.

The same principle applies for 1099-nurses, a growing phenomenon, or for nurses who may have taken on different staff positions and moved around. One or two years of proven, consistent income is going to be taken into account as part of an overall loan profile that also looks at other factors, such as credit score. The employer changing doesn’t matter as much as a consistent income does. 

#3: Don’t forget about your taxable income

Simental also brought up the very important point that for nurses who make a high gross income and write off expenses to bring down their taxable income, it’s a strategy that pays off in the short term, but when it comes to lending, it’s the taxable income that matters. 

A lender can only use what a nurse has made “on paper,” i.e, that taxable income, not the gross income. So keep that in mind as you negotiate your contract and pay structure if your goal is to own a home in the next two few years. It’s to your advantage to have a higher taxable income if you want to get a larger loan because the loan will be based on your taxable income. 

“This is why I say speak with the professionals sooner rather than later because they'll let you know how much money to make on paper for you to qualify,” he added. 

#4: Real estate is one of the safest investments

If you’re a nurse who is hesitant about investing, Simental offered the assurance that real estate is one of the safest forms of investment. “People always need a place to live,” he pointed out. 

However, he still recommended you always work with a professional, especially if you are looking to buy in an area you’re not familiar with and if you plan on renting the space out. He also listed some of the types of properties you could consider: 

• Single-family homes
• Condos
• Townhome-single-family property
• Duplexes-two-family property
• Triplex=3-unit property
• Fourplex-4-unit property 

If you’re looking for a place to buy to live in but also have an investment property, Simental also offered this housing hack that his mother recommended (but he didn’t listen to). The hack is this: buy a 4-unit property with an FHA loan (putting only 3.5% down instead of 20-25% down) and live in one of the units for at least 1 year while you rent the other units out. After that first year, you’re able to move out of that property and buy another property. 

“Now you have four people paying you rent, right whether it's $1,000, or whatever the rent is, you’re for sure should be able to cover your mortgage,” he said. “And once you move out of that four-unit property, you can buy another property with the same FHA loan.”

The next property, he explained, should be something you only want to live in short-term, so then you can upgrade and rent out that property again in another year. So in the end, thanks to the magic of saving and an FHA loan, you can have 5 people paying you to rent within two years. “Now you have some cash flow coming in,” Simental commented. 

Nurse Alice also offered her grand idea to buy an investment property near a hospital that frequently uses travelers, because it would lead to a constant income stream with renters who are working as travelers. 

However, while real estate is generally a safe bet for investment and there are lots of ways you can quickly earn back your money, Simental also cautioned that it’s important to do your homework and work with a professional so you don’t make any financial mistakes along the way. For instance, you’ll want to consider all of the additional expenses that come with owning a property outside of just the mortgage and look at other factors as well, such as the neighborhood and schools and potential of the property as a rental in the future. 

“Again, speak with a professional and let them jot out numbers and guide you through the process because if you're trying to do this yourself, it's going to be very difficult because it's not what you do day in and day out,” he explained. “Like I wouldn't try to take blood out of somebody. I don't do that on a daily basis. I would leave that to the professionals. So this is the same thing.”

#5: Consider the tax breaks of homeowning

Simental mentioned the fact that once you own a home or property, there are considerable tax benefits and breaks that come from homeownership. There are tax breaks that include from writing off mortgage interest to expenses to maintain the property. 

“You're setting yourself up for generational wealth and we're not even talking about the equity that you're going to gain in these properties,” Simental pointed out. 

#6: Time in > timing

Last but not least, if you’re trying to time your purchase of a home to the perfect “timing,” such as when the market drops, Simental advised listeners against it.  

“Time in the market always beats timing in the market,” he said. In other words, real estate especially tends to accrue value over time and that time will become more valuable than buying at a time when prices are low. He also pointed out that even if you time your purchase to snag a lower purchase price, that price often accompanies a higher interest rate, so what appears to be a cheaper price isn’t actually always cheaper. 

“Historically, 8-10% is what you will gain from investment in your primary residence,” he explained, adding that the right time to buy is when it’s right for you. 

For more tips and help from Simental, you can find him at @itsivansimental and The Mortgage Reports podcast.