Friday, September 27, 2013

How to Buy Investment Property?

How to Buy Investment Property? We have all seen the countless late night infomercials about how people have become overnight millionaires by buying investment property. We’ve seen the success stories and heard the wonderful tales of real estate success born out of desperation. We have also viewed them all with some degree of skepticism. The truth is that there is money to be made in real estate. The truth is also that there are not that many true real estate tycoons. Most of the so-called tycoons have made much more money selling their books than they ever actually made in real estate.

Investing in real estate is like any other venture you enter into it. It takes blood, sweat, and tears to make it work for you. While it takes a lot of work, it can be a very successful venture. There are many options for investment properties. Whether you are considering property rentals or buying property and fixing it up for resale there is a significant investment not only of money but time as well. No investment venture is going to be successful unless there is a great amount of love and labor involved.

How to Buy Investment Property? Here are a few tips for investing in rental properties:

1) Make sure that the area you are buying your rental property in has a very high demand for the type of property you are offering. You don’t want to invest in a family home as a rental property if your market is mostly college students. You could consider subdividing a larger home for this type of market and having two or three smaller rentals rather than one larger rental.

2) Check the property value in the area you are investing in. You don’t want to choose an area that is in decline for rental properties if you can avoid it. The declining state of the neighborhood will minimize your potential profits.

3) Be absolutely sure that the income generated by the unit will cover not only the mortgage you are taking on but also the empty times, repair, and upkeep. If you’re investing in a property you want to make sure that you are actually making money.

If you aren’t considering turning your investment into rental properties but are more interested in fixing it up and selling it at a higher rate there are some guidelines you should follow as well.

1) You must make your best effort to be accurate in your estimate of the work that needs to be done so that you can recoup your expenses and earn a little profit when you turn the house.

2) You need to educate yourself about the area the home is in. Learn the value of similar houses, or houses in a good state of repair in the neighborhood to see how much your potential profit may be. Remember that it isn’t necessarily a good thing to have the best house in the neighborhood. Potential buyers will assume that the value can’t go up much from that point.

3) Make sure you have a detailed inspection and are aware of every potential repair that needs to be made, which ones are immediate needs, which ones are cosmetic needs, and which ones can wait. Don’t waste money on the ones that can wait unless they will significantly improve the value of the home. Kitchens and bathrooms are the only ones I would consider for cosmetic needs and structural needs must be addressed before cosmetic needs. Trust me, it isn’t fun hanging drywall twice because the first job was ruined by the new leak in the roof.

How to Buy Investment Property? Overall, keep in mind that this is about making the most money possible for your investment. Keep the improvements as simple and cost effective as possible and you should be able to enjoy a nice profit. Also keep in mind that it takes money to advertise your home regardless of if it is a rental or you are trying to sell so keep a budget set aside for that. Remember that you will still have to make the mortgage payment even if it sits empty for a while so set your prices competitively for the area. Good luck with your investment and try to have some fun with it.

In opposition to hyperbolic reports about the eminent disaster that is the US housing market, the latest research actually shows the opposite. It is really not as bad right now as it has been lately, and may even be gradually improving. The economic focus on the housing market and stimulus attempts by the government are showing a gradual positive impact, and the market outlook for 2012 actually shows improvement from recent years, contrary to what many would have you believe. According to the Freddie Mac Report, this could be in due in part to a wide variety of factors, including increased homebuilder confidence, and an improvement to the general economic outlook overall. It could also be due to those first time home buyers and investors taking chances. Because many groups have a lot at stake in the housing market, there will always be mixed reports. However, even though the housing market in the US is currently in flux and also working differently than usual, reports show that the market has been improving little by little in the past year, largely from investors and first time homebuyers, and that homebuilders and home buyers are feeling cautiously optimistic.

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