Buy property investments: houses and condominiums for sale

Buy property investments: houses and condominiums for sale

Learn to buy investment properties to use as rentals, and see your income grow

Are you interested in learning how to buy investment property? Are you a first-time investor? Oftentimes, buyers who are new to investing fear making errors that will cost them more money than the investment itself. This leads to natural hesitation about diving into the pool. I will provide tips to help beginners learn about investment properties. The process is not difficult; you just need to follow the proper procedures.

Before we go further, I want you to understand that buying investment property is a complex business decision not to be taken lightly. You should study the subject in depth before taking any action, and seek professional help from your attorney, accountant, and real estate agent. That said, it is always good to have a plan in mind before you start looking for help with your property investments.

1. Choose the type of investment. Investment properties can include vacant land, rental houses, condominiums, apartment buildings, storefronts, commercial properties, industrial properties, mobile homes, mobile home parks, and more; each has varying degrees of risk and reward. For someone just starting out buying investment property for rental income, a rental house or small apartment building is probably the best choice. This type of rental property offers the opportunity for regular income, has shorter vacancies on average than commercial or industrial property, is less regulated than condominiums and mobile homes in most areas, and there are many places where you can get information and education on becoming a successful landlord in small residential properties. It is a good place to start, and it is the type we will concentrate on in this article.
2. Choose an area. Some people have a difficult time deciding where the best place to buy is. Look for a property location with a diverse economic base offering many employment opportunities. After all, tenants need income to reliably pay rent. The area should offer good schools, shopping, and transportation. If all three areas are satisfactory, then try looking at houses for sale so they will rent easily. Another possibility is locating and buying condominiums for sale. This, however, would involve much more property management on your part than buying a house would. Ideally, the location you choose will be an easy drive from your residence so you can keep an eye on it. The area should also be safe. Profits and money are not worth risking your life for, and the quality tenants you want to attract do not want to risk their lives either.

   Tip: When you investigate an area, get copies of local newspapers and city newsletters from the last few years so you are aware of things that may affect property values. Changes in laws, land-use planning, zoning changes, and many other things can change value. Talk to people in the community to find out what issues are being discussed. Talk to other investment property owners to find out how the community relates to landlords. Due diligence in this search can save you a lot of time and money.

3. Choose a location within the community. When buying a good investment property, the three most important things are 'location, location, location.' Location within the community will determine how easily you rent or resell the property. It will determine the price you can command. It will also determine the quality of customers you attract. It is one of the things about real estate that is unchangeable, so you have to choose right from the start.
4. Research property values and rents. This information is available from real estate agents, as well as from a variety of other services in most areas. You will want to call rental ads in the paper and talk to local landlords about what they are offering, how much they are charging, and what their experience is with the market. Some may be open to selling their property and may even be willing to finance it, so be sure to ask.
5. List the criteria an investment will need to meet for you to be interested. For instance, a single-family home with at least 3 bedrooms, 2 baths, and a 2-car garage that will rent for enough to cover the mortgage payment. Taking the time to define your search ahead of time, including the finance rates for your loans, will keep you on track and shorten your time to success.
6. Find a competent real estate agent who is in the area, knowledgeable about investment property, and willing to work. Make sure you get referrals. Interview agents before you choose one.
7. Analyze the property. When you find a potential property, gather all the data you need to determine the seller's motivation, what it will rent for, what the expenses will be, and who pays for what. With commercial investment properties you want to use as rentals, such as apartments or condominiums, it is imperative that you get all the information the seller has to offer. Then, when they are done providing information, it is your job to check it all out. You want your offer to be based on actual rents and actual expenses, not sloppy or fictitious numbers.
8. Research financing options. Financing investment properties can be challenging if you have little or no money to put down. If you have already developed a solid banking relationship with your local bank, things will go more smoothly with both your investment property loans and finance rates. You need to know that investment property finance rates are typically based on your credit score, so it would be good to check your current score before proceeding further. If you run into obstacles finding loans, do not give up. With extra time and perseverance, you may eventually find a perfect lending institution for you—one where you can develop a lifelong banking relationship.
9. Make an offer. Make your offer contingent on a review of all documents related to the property, a thorough inspection of all units by yourself and a professional inspector, and approval of the terms of your contract by your accountant and/or attorney. If your offer is accepted, your next task will be deciding whether you want to play a role in the rental management team or hire another professional. Consider your decision carefully, as investment property management is time-consuming, and prior knowledge in this area would definitely be beneficial.

Hopefully, you will find the perfect property investment and receive adequate financing. At that point, you will have successfully become a property investor, and it is time to enjoy your new-found wealth through your income property, whether building your future retirement or supplementing your existing income.