How To Buy Investment Property
If you want to learn how to buy investment property, this article is for you. Investment property could be either single family residents or apartment buildings that contain one to four apartments. Apartments with five or more apartments are considered commercial investment real estate. The ideal of investment property is to buy and make a profit. In order to do that, you must know a great deal about investing. Many first time investors fail miserably because they have not studied all the aspects before plunging into the fast paced world of investing.
- Learn as Much as You Can First. Before even thinking about buying investment property, you must learn all the basics. Investing is a big step for anyone to start on. It involves a big investment in most cases and your credit. If you buy the wrong property, you can lose more than you could imagine. A bankruptcy and eventual foreclosure will affect any assets you presently own. There are many places to learn all about how to buy investment property: internet, mentor or guru, real estate Broker or local investment club.
- Which Information Site is Right for Me? Looking into the many opportunities available, there are some choices to make. On the internet, there are some wonderful websites in education. Simply searching on your favorite search engine will bring up many available sites. Search for the top investment websites first. Also, search for websites that have real estate information to get a list of the top real estate agents in your area.
- A Mentor or Guru Can Be Found In Many Places. Mentors are available through real estate companies who are willing to show you the ropes of investing or they can be obtained through real estate investment clubs. Look for these qualities in a mentor: experienced in selling investment properties, reliable, dependable, keeps appointments and knows all about creative financing. A mentor can also be found at investment clubs through their training sessions.
- Looking for Investment Properties. Finding the best deal is not as easy as it sounds and it may take weeks or months. Contact many sources and offer to purchase investment property with the right deal. If your mentor comes up with the best deal, purchase through her but do not limit your choices. Here is a list of places to try: banks, REO departments, local real estate offices and financial corporations. There are also HUD, VA, Marshall Office, IRS, Fannie Mae and Freddie Mac foreclosure auctions.
- Using Due Diligence in Your Search. Due diligence is a thorough knowledge of the properties that you are interested in. Searching and investigating before purchasing is essential to any successful deal. This could include: requesting a title report to look for additional liens, such as 2nd, 3rd and 4th trust deeds, critique supplied net sheets, checking out the neighborhood for nuisance problems and inquiring why the seller is interested in moving and selling his property.
- Financing Can Make or Break the Deal. When figuring out the net sheet, the mortgage payment is the core of the sheet. A bad mortgage with high interest rates can literally cause a good property to go bad. Some banks offer teaser rates and then increase them periodically. These increases can happen monthly, quarterly or bi-annually. It is very important to have a thorough knowledge of all loans being involved and the pros and cons. There are many loans to consider in buying investment property: interest only loans, fixed rate loans, adjustable rate loans, fixed for 3 to 10 years and then adjustable and insured FHA loans.
- Running an Investment Business Takes Patience. The final and most important step in running your new business is knowing how to handle tenants and the problems that may occur. Prior management experience is a big plus. The many problems that can occur are: bad tenants that need evicted, hiring maintenance crews and overall management of the property. A smart investor does the work their self or hires individuals that will save him money and time.