Property Investments

| November 5, 2011

Property investments is the purchase of a property, or properties that will generate rental income. When considering the purchase of property investments it’s usually a good idea to start with a small single property rental. Consider how much time you can devote to administration of the property, paying of bills, calls from renters, repairs, etc. and decide where you want your property located.

If you don’t have a lot of free time or someone to look after the property for you, it might be more convenient to have the property in the same town, or close to your primary residence. Another advantage of investing in property close to home is some time is saved for the buyer on research. Some things to take into account before making property investments is learn the neighborhoods, know which ones are more popoular or in demand, know if rentals are readily available or scarce, compare rental rates (remember you need to collect enough rent every month for the payment on the property and any repairs, maintenance fees, taxes and incidentials that occur).

The best rental property is one that will pay for itself, which means it’ll be rented most of the time and can be rented for enough each month to cover all expenses. Once deciding to make property investments it’s easier to go ahead and get a preapproval loan from the bank. This means you’ll know exactly how much you can afford and it’ll make your loan process simpler, once you make an offer and it’s accepted. Once you have an established price range, start looking at Multiple Listing Service (MLS), and the classifieds, look for housing in desirable neighborhoods, close to schools and businesses, and the less maintenance needed on the home, the better.

When looking at individual properties, try to look at them from an investor’s point of view. Color schemes and floor layouts really don’t matter as long as the property is rentable, but one rule of thumb to go by is usually the simplier the better, remember your income will hinge on the fact of keeping this property rented. If you’re looking at condos. read the associations bylaws to make sure it’s okay to rent the property, if pets are allowed, and other rules set by the condo association. Familiarize yourself with federal and individual state landlord and tenant laws. Learn the Federal Fair Housing Act, and check for any local zoning restrictions.

Check the US Dept. of Housing website, they list rental rates for different areas in the US. Once an offer has been accepted it’s time to begin the loan closing process. Have an appraisal done on the property, a home inspection, and purchase homeowners insurance (most banks require proof of homeowners insurance before closing on a loan). Get a simple lease prepared by your legal resentative. Make a list of rental requirements such as good income, employment stability, head count, car count, etc. After the property is rented, keep your property investments protected by keeping the property in good shape.

Category: Investment

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